Describe the properties of a progressive tax and illustrate with ...

[Chloeellawright]

Describe the properties of a progressive tax and illustrate with an example.
 
  What will be an ideal response?

Question 2

In the early 1990s Intel produced a 486 microchip for personal computers that contained a math co-processor that increased its speed of performing calculations and other operations.
 
  After a time Intel decided to disable the coprocessor on large numbers of their chips before sending them out for shipment and sale. What could have been the motive of Intel to deliberately reduce the quality of some of its chips?

[234sdffa]

Answer to Question 1

A progressive tax is one in which the burden, expressed as a percentage of income, increases as income increases. A tax that exacts a higher proportion of income from higher-income households than from lower-income households is a progressive tax.

Answer to Question 2

Since the math coprocessor was installed on all of its chips Intel didn't have an ability to find out their customers ability and willingness to pay for it. However, by disabling the math coprocessor on some of their units and leaving it intact on the remainder, customers would decide for themselves whether or not the premium price for the coprocessor was worth it. This allowed Intel to segregate the market and increase profits through price discrimination.