Question

A consumer values a car at $30,000 and a producer values the same car at $20,000. If the transaction is completed at $24,000, what level of sales tax will result in unconsummated transaction

Answer 1

Dear user,

Answer to your query is provided below

$4000 sales tax

Step-by-step explanation:

In question, a consumer values a car at $30,000 and a producer values the same car at $20,000. If the transaction is completed at $24,000, then the transaction will generate:

$6,000 worth of buyer surplus and $4,000 of seller surplus.

$4000 sales tax will result in unconsummated transaction.