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The burden of a tax is shared by producers and consumers. Under what conditions will consumers pay most of the tax? Under what conditions will producers pay most of it? What determines the share of a subsidy that benefits consumers?
The burden of a tax and the advantages of a subsidy rely on the elasticities of demand and supply. Determine if the ratio of the elasticity of demand to the elasticity of supply is small, the burden of the tax falls basically on consumers. Alternatively, if the ratio of the elasticity of demand to the elasticity of supply is large, the burden of the tax falls basically on producers. Likewise, the benefit of a subsidy accrues mainly to consumers (producers) if the ratio of the elasticity of demand to the elasticity of supply is small (large).
Expalin the term Company Objectives Financial management is anxious with making decisions about the provision and use of a firm's finances. A rational method to decision-making
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How to calculate the up anh down factor in the binomial interets rate tree
You deposit $500 today in a savings account that pays 3.5% interest, compounded annually. How much will your account be worth at the end of 25 years?
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