Suppose that the municipal government of Calgary decides to tax economic rent on a highly sought-after piece of land.The result would be
A)little or no effect on the supply of the land.
B)an increase in the supply of the land.
C)a reduction in the supply of land.
D)a shift of the entire tax onto the consumer.
E)a rise in the price of land.

Question

Quizplus · Accepted Answer

Taxing economic rent on land does not affect its supply because the supply of land is perfectly inelastic; the quantity of land is fixed and cannot be increased or decreased by changes in price or taxation.

Suppose That the Municipal Government of Calgary Decides to Tax