BA540 Managerial Economics
Skousen, M. (2013). Economic Logic. Fourth Edition. Regnery Publishing
Price Increases and Property Tax – 250 words
Problem 4 in the â€œProblems to Ponderâ€ section at the end of chapter 9 asks about the oil price increase from 1973-1980. We have also seen this in 2005 and 2010, although not as dramatic a price increase. Please answer the questions in this problem. Discuss.
Problem #4 â€“ When oil prices increased 10 fold during the 1973-80 energy crisis, many oil companies made huge profits. During this energy crisis, Congress considered imposing an â€œexcess profitsâ€ tax on oil companies. If you were in Congress, would you vote for such a tax? Do unexpected monopolistic profits serve any useful function in a market economy? (Hint: Could additional oil revenue be used to explore and develop new oil fields?)