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Second, the tax raises the production cost as with the specific tax but the amount of tax varies with price level. The upward shift of the supply curve is accompanied by a pivot upwards and to the left of the original supply curve. The vertical distance between the two supply curves is equal to the amount of tax in per cent.
The economic incidence of a tax falls on the party that bears the actual cost of the tax. Put another way, economic incidence reflects the actual change in an individual's or firm's resources due to the tax. [2] The statutory incidence of the tax is irrelevant to the economic incidence of the tax. [2]
Opportunity cost; The opportunity cost of a choice is the foregone benefit of the second best choice. [19] Determining the opportunity cost requires detailing the costs and benefits of each action the business is considering to pursue, and the cost of choosing one activity over another. [20]
[5] [6] Others argue that tax competition is generally harmful because it distorts investment decisions and thus reduces the efficiency of capital allocation, redistributes the national burden of taxation away from capital and onto less mobile factors such as labour, and undermines democracy by forcing governments into modifying tax systems in ...
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
Since some costs cannot be controlled in the short run, the variable (controllable) costs will always be lower than the total costs in the short run. Samuelson [who?] indicates this point on the consumer demand curve is where the price is equal to one over one plus the reciprocal of the price elasticity of demand. [5]
Neoclassical economists defined economic rent as "income in excess of opportunity cost or competitive price." [10] According to Robert Tollison (1982), economic rents are "excess returns" above the "normal levels" that are generated in competitive markets. More specifically, a rent is "a return in excess of the resource owner's opportunity cost ...
A third consideration for optimal taxation is sales tax, which is the additional price added to the base price of a paid by the consumer at the point when they purchase a good or service. Poterba in a second article called "Retail Price Reactions To Changes in State and Local Sales Taxes" tests the premise that sales taxes on the state and ...