Assuming that corporations maximize profits and investors maximize the return from their investment, a corporate income tax is likely to:

Question

Quizplus · Accepted Answer

A corporate income tax increases the cost of doing business for corporations, which may lead them to raise prices to maintain profit margins. This can increase the price of corporate goods. Simultaneously, as consumers shift away from more expensive corporate goods, demand for noncorporate goods may increase, potentially decreasing their prices due to competitive pressure.

Assuming That Corporations Maximize Profits and Investors Maximize the Return