Business Economics
Assignment 1

• Five points each.

1. The simple case of a fixed per-unit tax is indicative of more complicated ones. Consider a proportional sales tax and a progressive sales tax. How do the tax revenues, and quantities produced compare in these various cases?
2. Explain how value can be created simply by exchange even when nothing new is produced? [This is true for a monetary and for a barter economy].
3. Explain how competitive privately issued currencies would work automatically to provide consumers with protection against inflation?
4. Would interest exist in a pure exchange economy where no production occurred? Explain.
5. Briefly contrast the static and dynamic views of monopoly and the policies appropriate for each.