How do taxes distort the incentives of buyers and sellers in a market?
A tax drives a "wedge" between the price paid by buyers and that received by sellers. In general, a tax will both increase the price paid by buyers and decrease the price received by sellers, causing both the quantity of output demanded and the quantity supplied to decrease.
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Suppose that, last year, the price of peanuts fell and the quantity sold increased. Use supply and demand analysis to explain how these changes could have occurred
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If the price of capital is $24, the price of labor is $15, and the marginal product of capital is 16, the least costly combination of capital and labor requires that the marginal product of labor be ________
Fill in the blank(s) with correct word
Why do firms form a cartel? How do cartels achieve their goals?
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From the Industrial Revolution to the present, innovation has played a major role in the growth of output. What do the leading analysts of economic growth argue were some of the most significant innovations of this period?
What will be an ideal response?