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Author Question: Many state governments use lotteries to raise revenue. If a lottery is viewed as a tax, is it most ... (Read 94 times)

Pineapplelove6

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on: Jun 29, 2018
Many state governments use lotteries to raise revenue. If a lottery is viewed as a tax, is it most likely a progressive tax or a regressive tax?
 
  What information would you need to determine whether the burden of a lottery is progressive or regressive?

Question 2

Are restaurant coupons a form of price discrimination? Why or why not?
 
  What will be an ideal response?
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johnharpe

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The lottery tax is generally considered to be regressive because data show that poorer people spend a greater share of their incomes on lottery tickets than do people with higher incomes. The data we need to determine if the burden of a lottery is progressive or regressive are the different income brackets and the percentage of income people in each income bracket spend on the lottery.

Answer to Question 2

Yes, coupons are a form of price discrimination. People who are willing to take the time to clip coupons have a higher price elasticity of demand than people who are not. Coupons are a way for firms to cut the price paid by higher price elasticity consumerswithout having to cut the price for everyone else.


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