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In Exercise 6 if the government applies a luxury tax of $20 \%$ per coat, how are profits affected?

Decreases by 4750

Calculus 1 / AB

Chapter 3

Applications of the Derivative

Section 5

Applications II - Business and Economic Optimization Problems

Derivatives

Oregon State University

Baylor University

University of Michigan - Ann Arbor

Lectures

04:40

In mathematics, a derivative is a measure of how a function changes as its input changes. Loosely speaking, a derivative can be thought of as how much one quantity is changing in response to changes in some other quantity; for example, the derivative of the position of a moving object with respect to time is the object's velocity. The concept of a derivative developed as a way to measure the steepness of a curve; the concept was ultimately generalized and now "derivative" is often used to refer to the relationship between two variables, independent and dependent, and to various related notions, such as the differential.

30:01

In mathematics, the derivative of a function of a real variable measures the sensitivity to change of the function value (the rate of change of the value of the function). If the derivative of a function at a chosen input value equals a constant value, the function is said to be a constant function. In this case the derivative itself is the constant of the function, and is called the constant of integration.

01:24

Suppose an excise tax of 1…

01:10

What is the long-run welfa…

03:34

Effect of Luxury Tax on Co…

01:18

How does an increase in th…

02:11

Suppose that your state ra…

Hey guys, let's do Problem seven. The problem says, what is the long run welfare effect of for profit tax? The government collects a specific percentage of the farms profit. That is the profit tax as a strong each competitive form in the market now, in this situation, if the tax is based on economic profit and the farmers will make zero economic profit, and then tax will not have long run effect in this situation. On the other hand, if the tax is based on business profit and the business profit is greater as compared to the economic profit, then the tax on profit raises of the tax cost of the farm. As a result, there will be only fewer farms in the market. The accurate effect of tax will depend on why business profit is greater as compared to the economic profit. For example, if the government ignores opportunity cost, flavor, but consists of all capital costs in calculating profit, pharmaceutical substitute labor for capital.

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