Question

A television costs $100, but a new excise tax law imposes a $5 tax on the sale of the set. If Takeshi wants to buy a television, what would have to be his minimum willingness to pay? $105 more than $105 $100 between $100 and $105

Answer 1

Answer:

$105

Explanation:

It is obvious when any tax is imposed on the product it is ultimately collected from the consumer. Here, original cost was $100.00 and thereafter new excise tax of $5.00 on sales is imposed.

Which resulted in increase in price of Television from $100.00 to $105.00

Therefore, when a normal consumer buys such Television he shall be willing to pay $105.00