Author Question: What is the advantage of the government imposing an ad valorem tax over a specific tax when facing a ... (Read 49 times)

altibaby · **on:** Jul 1, 2018

What is the advantage of the government imposing an ad valorem tax over a specific tax when facing a monopoly?

What will be an ideal response?

Question 2

In 1950 there were 16 individuals contributing to Social Security for every one person collecting benefits.

a. True b. False

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

Answer to Question 1

When comparing an ad valorem tax to a specific tax which generates the same revenue, the ad valorem tax is less distortionary, resulting in a smaller DWL.

Answer to Question 2

a