Collecting large amount of tax revenue-distorting demand

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Reference no: EM131082015

The sales manager of a retail outlet suggests that the best way to increase the number of customers is to have a sale. If a 10 percent price cut doesn't bring in enough customers, then he'll cut prices 20 percent. Increased cash flow should take care of profits. Do you agree? Explain.

How would a proposed increase in cigarette taxes succeed according to the following criteria: collecting a large amount of tax revenue; distorting demand as little as possible; discouraging consumption of harmful commodities?

Reference no: EM131082015

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Collecting large amount of tax revenue-distorting demand : The sales manager of a retail outlet suggests that the best way to increase the number of customers is to have a sale. If a 10 percent price cut doesn't bring in enough customers, then he'll cut prices 20 percent. Increased cash flow should take care..

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