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 tax rate will result in unconsummated transaction?

Question

Quizplus · Accepted Answer

If a tax rate of 40% is applied to the transaction price of $24,000, the tax would be $9,600, making the total cost $33,600, which exceeds the consumer's valuation of $30,000, resulting in an unconsummated transaction.

A Consumer Values a Car at $30,000 and a Producer