Author Question: Discuss the thought process of the owners of a new business with regard to property taxes when ... (Read 27 times)

silviawilliams41 · **on:** Jul 1, 2018

Discuss the thought process of the owners of a new business with regard to property taxes when deciding where to locate. Will they always locate where property taxes are lowest? Why or why not?

What will be an ideal response?

Question 2

When deciding on output levels, members of a cartel

A) set their output where MR = MC.
B) produce the same level of output as if they were in a competitive market.
C) take into account the impact of changes on members' profits.
D) act as if they were monopolies.

polinasid · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

When deciding where to locate a new business, business owners typically have their choice of several sites and thus can choose among various locations. While high property taxes create a disincentive to improve upon property, property taxes are used to provide government services. Thus businesses are concerned with whether the property tax covers the value of the services the business will receive from government. In other words, they will not always locate where property taxes are the lowest. They will locate in communities that have the optimal mix of public sector output at the right property tax price.

Answer to Question 2

C