Friday, March 10, 2006

Taxes

Suppose the government raises $100 million through a $0.01 tax on widgets, and another $100 million through a $0.10 tax on gadgets. If the government doubled the tax rate on widgets and eliminated the tax on gadgets, would it raise more, less, or the same amount of money as before?

2 comments:

KM said...

Yes, you need the Q.

Since the problem tells you the amount of money they made, you have the quantity.

And you're on the right track. :)

KM said...

You have it - excellent points!

Reid - yes, it would be renewable, but a great point on the amount people are willing to pay in taxes.