Q. I In a hypothetical economy, only the following transactions take place. firm M sells all of its product worth Rs. 12000 crores to firm N. Firm N sells its entire products to firm R for Rs. 19500 crores. Firm R sells his goods for final demand at Rs 27600 crore. Now calculate the followings: a) Value added by each firm. b) An indirect tax of 12% is levied on N's product. the burden of this tax is shifted to consumer. determine the market price of the goods for each fim. c) A subsidy of Rs. 75 crores are given to firm M. As a result, it reduced the price of its product. Determine the market price of output for all three firms.

Q. I In a hypothetical economy, only the following transactions take place. firm M sells all of its product worth Rs. 12000 crores to firm N. Firm N sells its entire products to firm R for Rs. 19500 crores. Firm R sells his goods for final demand at Rs 27600 crore. Now calculate the followings: a) Value added by each firm. b) An indirect tax of 12% is levied on N's product. the burden of this tax is shifted to consumer. determine the market price of the goods for each fim. c) A subsidy of Rs. 75 crores are given to firm M. As a result, it reduced the price of its product. Determine the market price of output for all three firms.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Q. 1 In a hypothetical economy, only the following transactions take place. firm M sells all of
its product worth Rs. 12000 crores to firm N. Firm N sells its entire products to firm R for Rs.
19500 crores. Firm R sells his goods for final demand at Rs 27600 crore.
Now calculate the followings:
a) Value added by each firm.
b) An indirect tax of 12% is levied on N's product. the burden of this tax is shifted to
consumer. determine the market price of the goods for each firm.
c) A subsidy of Rs. 75 crores are given to firm M. As a result, it reduced the price of its
product. Determine the market price of output for all three firms.

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