A tax on rent earned by an input should have no effect upon the output price.

Name: A tax on rent earned by an input should have no effect upon the output price.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A tax on rent earned by an input would not directly impact the cost of producing the output. The cost of the input may increase due to the tax, but the producer can still decide what price to sell the output for based on market demand and competition. Therefore, the output price should remain unaffected by the tax on rent earned by an input.

A Tax on Rent Earned by an Input Should Have