A retailer buys a bicycle from the wholesaler at $140 and the wholesaler charges a sales tax at the prescribed rate of 9%. The retailer fixes the price at $12 and charges sales tax at the same rate. Apply value added tax system of sales tax calculation to answer the following questions.(i) What is the price that a consumer has to pay to buy the bicycle?(ii) Find the input tax and output tax for the retailer.(iii) How much VAT does the retailer pay to the government?

(i) Here, the price P = $12, the rate of sales tax, r = 9% Therefore, the cost price for the…

Answered: A retailer buys a bicycle from the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A retailer buys a bicycle from the wholesaler at $140 and the wholesaler charges a sales tax at the prescribed rate of 9%. The retailer fixes the price at $12 and charges sales tax at the same rate. Apply value added tax system of sales tax calculation to answer the following questions.

(i) What is the price that a consumer has to pay to buy the bicycle?

(ii) Find the input tax and output tax for the retailer.

(iii) How much VAT does the retailer pay to the government?

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