Find who live in high sales tax areas

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It has been found that people who live in high sales tax areas are much more likely to purchase over the internet where they are usually exempt from sales tax from firms located in another state. The NGA has proposed a uniform tax of 5% on all internet sales. It has been estimated that this would reduce the total internet sales by 23%. Alternatively, if each state imposed its own taxes which average 6.33%, internet sales would decrease by 30%. Use an indifference-curve/budget line diagram to illustrate and explain these results. Put internet sales on one axis and all other sales on the other axis.

Reference no: EM13189902

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