--%>

Assertion for the levying of a tax on air polluters

Use the circular flow model to confirm this assertion for the levying of a tax on air polluters?

E

Expert

Verified

This will be an increase in net taxes paid by business. Since business will regard this as an increase in costs, it will decrease its demand for resources, leading to a decreased flow of income to the resource markets.  With less money income, households will decrease their consumption demand for goods and services from businesses and business receipts will be less.  Also, the decrease in household income will lead to a decrease in net household taxes paid to government.

The distribution of income will be slightly away from profits and therefore toward the other three categories.  To the extent that total tax revenues increase, there will be a slight increase in allocation of resources to government away from private enterprise.  There will also likely be a reallocation of resources towards pollution control equipment.  The increased costs to business, having caused decrease in supply, will tend to increase unemployment and prices.

   Related Questions in Business Economics

  • Q : Elucidate types of unemployment

    Elucidate types of unemployment?

  • Q : What do you mean by Shuffling the Deck

    What do you mean by Shuffling the Deck?

  • Q : Technological advances in producing

    When given resources can now produce additional goods than was previously probable, then there have been a: (1) Stock market boom. (2) Competitive spurt which shrinks entrepreneurial gain. (3) Concavity reversal in the production possibilities frontier. (4) Bigger rel

  • Q : Determine the relative cost of a product

    If banana divides are $2, CD disks are $10, and SCUBA vacations are $360, then what is the relative cost of a SCUBA vacation in phrases of a CD disk: (i) 36 disks. (ii) 360 disks. (iii) 180 disks. (iv) 20 disks. (v) 3,600 disks.

    Q : Define the ability of goods by wealth

    According to Adam Smith nation's wealth is, not the gold this possesses, but somewhat it’s: (1) number of people. (2) capability to give goods for its people. (3) foreign investments. (4) domestic financial capital. (5) militar

  • Q : What does financial leverage specify

    What does financial leverage specify? And also states its limitations?

  • Q : What does high or low operating

    What does high or low operating leverage specify?

  • Q : Cost of debt and Equity Cost of debt =

    Cost of debt= (1-tax rate)* interest rate * (debt ÷capital employed)Cost of equity = risk free rate + market premium (equity shareholders funds÷ capital employed)

  • Q : The market system provides such a

    Explain the statements: The market system provides such a variety of desired goods and services precisely.

  • Q : Explain about the successful speculation

    Successful speculation tends to: (1) generate inflationary pressure. (2) assist stabilize relative prices. (3) reduce the incomes of the eventual producers of goods. (4) make relative prices more volatile. (5) increase the risk born through the eventu