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Suppose the u.s. government put a 'special 20 percent luxury tax' on the retail price of expensive and fancy yachts in order to collect more taxes from boat owners. assume the price elasticity for these yachts is elastic at 2.50. conclusion: we can probably expect that yacht sales will go down and the government will not collect lots of new tax revenues.

Sagot :

True. We can probably expect that yacht sales will go down and the government will not collect lots of new tax revenues.

It is given that the US government has put a 20% luxury tax and the price elasticity for these yachts is elastic at 2.50.

Due to the new tax on luxury goods, it can be estimated that the sales of yachts go down as the maximum retail price of the yachts will become more expensive. This can mean that fewer people than before will be able to afford the yachts. Due to fewer sales, the government will not have enough tax revenues.

To learn more about price elasticity visit: https://brainly.com/question/4610585

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