Question

In: Economics

True/False or Uncertain? “If the “sticker price” on a t-shirt is $10 and the sales tax...

True/False or Uncertain? “If the “sticker price” on a t-shirt is $10 and the sales tax is 6%, the actual price paid by consumers will be $10.6. If we raise the tax to 10% both the sticker price and the actual price will rise.”

Solutions

Expert Solution

Actual price = Sticker price + tax

So, for 1st case,

Actual price = $10 + (0.06*$10)

= $10.6, so given is correct.

Now, if the tax is raised, the actual price will rise as the tax portion of the calculation will increase but the sticker price will stay the same.

So, the given statement is False.

Rahul Sunny answered 2 years ago
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