> They want to raise 2 billion in Northern Virginia. That > has to come from somewhere. > But, where will the money come from? Will people buy less each week? > mitch
Clearly, people will move up along their demand curves and buy a bit less, but a small tax increase will leave most purchases intact, and the money will come from these purchases. The money comes from a reduction in the consumer and producer surplus. Many consumers are paying more than their maximum, so that difference will just be less. The typical microeconomics books won't tell you this, but most of the so-called producer surplus goes to land rent, so the reduction in the producer surplus will be at the expense of rent; there will be a slight diminution of site rents, relative to what they would have been, as a few marginal firms leave industries. > Will they randomly select items to strike from their purchases? No. Those with minimal consumer surpluses will cut back. > Or will > they have difficulty at the end of the month. Yes, those not good at planning, or who have short or variable time preferences. Fred Foldvary ===== [EMAIL PROTECTED]
