Question

Gomi Waste Disposal is evaluating a project that would require the purchase of a piece of equipment for $164,000 today... What is the tax rate expected to be in year 1?

Options:
A) 0.15
B) 0.25
C) 0.30
D) 0.35

Answer 1

There is insufficient information to determine Gomi Waste Disposal's expected tax rate in year 1. The student's question cannot be answered with the provided context, which is regarding marketable permits and pollution taxes.

Step-by-step explanation:

The student's question asks about the expected tax rate for Gomi Waste Disposal in year 1, with options A) 0.15 B) 0.25 C) 0.30 D) 0.35 provided. However, there is no information in the provided context to accurately determine the tax rate for the first year. A better understanding of the company's financials, along with the local tax legislation, would be needed to provide an accurate answer to this question.

In the provided information about marketable permits and pollution taxes, firms respond to economic incentives to reduce pollution. Elm, Maple, Oak, and Cherry firms reduce their garbage output at various costs, demonstrating the principle of firms undertaking abatement measures that are cost-effective. In the context of taxation, firms will abate pollution as long as the marginal cost of abatement is less than the tax on pollution.