A Tax Is Designed to Complement the Local Sales Tax

question 7

Short Answer

A tax is designed to complement the local sales tax structure, to prevent the consumer from making no- or low-tax purchases in another state, outside the United States, or online and then bringing the asset into the state.

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Definitions:

Fixed Cost

Expenses that do not vary with the level of production or sales, such as rent or salaries.

Variable Cost

Costs that vary directly with the level of production or with volume of output.

Inelastic Demand

A market situation where the demand for a product does not significantly change with a change in its price.

Elastic Demand

A situation in which the demand for a product is sensitive to price changes, meaning that a small change in price results in a large change in the quantity demanded.