Answer the following three questions (23 to 25) based on the information in BOX-1
BOX-1: Demand and supply functions in a competitive market are given as and respectively where P is the price of the commodity, D is the demand and S is the supply quantity.
In Box-1, if a commodity tax of rupee 1 per unit is levied, total government tax revenue collected will be equal to (approximately)
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Answer the following three questions (23 to 25) based on the information in BOX-1 BOX-1: Demand and supply functions in a competitive market are given as D = 40 - 4P and S = 5P - 5 respectively where P is the price of the commodity, D is the demand and S is the supply quantity. In Box-1, if a commodity tax of rupee 1 per unit is levied, total government tax revenue collected will be equal to (approximately) (A) Rupees 100 (B) Rupees 200 (C) Rupees 5 (D) Rupees 18
Taxation: incidence and efficiency has come up 79 times in 7 exams since 2009.
This question is on The Laffer curve, tax buoyancy and tax revenue, part of Taxation: incidence and efficiency in Public Economics.
How revenue responds to rates and to growth.
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Question from the UoH 2019 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.