Many county fairs have auctions at which the animals raised by children are sold to the highest bidders and the children get to keep the proceeds.For various reasons,the prices received by the children are typically much higher than the market prices would be for similar animals.
(a)Suppose many of the bids were won by the grandparents of the children.Why might this behavior be caused by the existence of transfer taxes?
(b)On the other hand,perhaps the grandparents just wished to support the agricultural endeavors of their grandchildren.Describe a way in which an empirical researcher could distinguish between this explanation and the tax explanation in part (a).

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The Answer of Many county fairs have auctions at which the animals raised by children are sold to the highest bidders and the children get to keep the proceeds.For various reasons,the prices received by the children are typically much higher than the market prices would be for similar animals.
(a)Suppose many of the bids were won by the grandparents of the children.Why might this behavior be caused by the existence of transfer taxes?
(b)On the other hand,perhaps the grandparents just wished to support the agricultural endeavors of their grandchildren.Describe a way in which an empirical researcher could distinguish between this explanation and the tax explanation in part (a).

Many County Fairs Have Auctions at Which the Animals Raised