00:01
So here we have a question about taxation and the first thing we need to know is what the heck the equi -marginal principle means.
00:09
And the equi -marginal principle means that for optimality, all firms or in general, right, actors, they could be individuals, they could be governments, they could be, you know, whatever, need to operate at the same margin, right.
00:35
And for example, in the terms of firms, right, for example, that might be the same marginal cost.
00:44
We should have the same margin applying to everyone because imagine you have firms and one firm can produce at a cost of 100 and another firm costs 200.
00:55
The equi -marginal principle is being violated.
00:58
More production should happen at the firm that is producing more cheaply but if all firms have the same marginal cost, there's no way to reallocate.
01:07
So my answer here is false and the idea here is that imposing a uniform tax incentivizes firms to all act at the same margin to satisfy and i'm going to simplify this to satisfy the equi -marginal principle...