Question

A consumer values a car at $525,000 and a producer values the same car at $485,000. If the transaction is completed at $510,000, what level of tax rate will result in unconsummated transaction?a) 1%b) 2%c) 5%d) 3%

Answer 1

Answer:

d) 3%

Explanation:

The difference between the consumer and producer value is $40,000

However, the difference between the transaction and producer value is $25,000

So, tax rate that will result in unconsummated transaction is 3% ($15,300) which is the closest number to the difference between consumer/producer and producer/transaction results