What is the break-even sales unit?

Suppose that the government introduces a per-unit tax on sellers on the sales of a good, but the tax only applies to the first x units sold. What would the supply and demand curves look like?

  • Suppose that the government imposes a per-unit sales tax on the sale of a good, but the tax only applies to the first X number of units sold (i.e., no taxation from (x+1)th unit onwards), and on no further unit-sales of that good. What would the supply and demand curve then look like? Sales  tax is not levied against the seller of a good, but on the purchaser.  The seller collects the tax, and forwards it to the government agency  which imposes it.

  • Answer:

    If I understand this poorly-worded question correctly (perhaps you could tweak it as per my suggestion above?), then I would wait until you bought yours first.   So, the result would be that there would be more of them on the shelf, because anyone who can do basic math would do the same. Eventually, the manufacturer would make less of them, because they were sitting on the shelf waiting for someone to be the first dunce to buy something at a higher incurred cost.

Steve Johnson at Quora Visit the source

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