In the long run, a reduction in the corporate profits tax may lead to ________ prices for the products of corporations and ________ prices for the products of partnerships and proprietorships.

Question

Quizplus · Accepted Answer

A reduction in the corporate profits tax decreases the cost of production for corporations, potentially leading to lower prices for their products. Partnerships and proprietorships, not benefiting from the tax reduction, may need to raise prices to maintain their profit margins relative to corporations.

In the Long Run, a Reduction in the Corporate Profits