Weaken the case for a corporate income tax

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Megacola faces demand of Q=2,200-20P. Its marginal costs are constant at $5 per unit. a. Show that Megacola will not change its behavior if the government introduces a 20% tax on its profits. b. Does the existence of firms such as Megacola strengthen or weaken the case for a corporate income tax? Explain.

Reference no: EM131109537

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