Adams Corporation manufactures appliances. This year, the government increased the corporate tax rate by 5...
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Adams Corporation manufactures appliances. This year, the government increased the corporate tax rate by 5 percent. Adams responded by raising its prices. Customer demand remained steady; therefore, Adams's before-tax profits increased and after-tax profits remained constant. Required: a. Who bears the incidence of the increase in Adams's corporate tax? b. How would your answer change if Adams did not raise prices, resulting in a decline in its after-tax profits and a drop in the market price of its stock? Complete this question by entering your answers in the tabs below. Required A Required B Who bears the incidence of the increase in Adams's corporate tax? Adams Corporation shareholders Adams Corporation Adams Corporation employees Adams Corporation customers Complete this question by entering your answers in the tabs below. Required A Required B How would your answer change if Adams did not raise prices, resulting in a decline in its after-tax profits and a drop in the market price of its stock? Adams Corporation shareholders Adams Corporation Adams Corporation employees Adams Corporation customers
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