There are three firms In an economy: A. B, and C. Firm A buys $350 worth of goods from firm B and $150 worth of goods from firm C. and produces 250 units of output, which it sells at $4 per unit. Firm B buys $200 worth of goods from firm A and nothing from firm C, and produces 250 units of output, which it sells at $6 per unit. Firm C buys $300 worth of goods from firm A and S100 worth of goods from firm B. It produces output worth $800. All other products are sold to consumers. Instructions: Round your responses to the nearest whole number. a. Calculate GDP. b. If a value-added tax (a tax on the total value added by each firm) of 15 percent is introduced, how much revenue will the government get? %24 c. How much would government get if it Introduced an income tax of 15 percent? d. How much would government get if it Introduced a sales tax of 15 percent on output?

There are three firms In an economy: A. B, and C. Firm A buys $350 worth of goods from firm B and $150 worth of goods from firm C. and produces 250 units of output, which it sells at $4 per unit. Firm B buys $200 worth of goods from firm A and nothing from firm C, and produces 250 units of output, which it sells at $6 per unit. Firm C buys $300 worth of goods from firm A and S100 worth of goods from firm B. It produces output worth $800. All other products are sold to consumers. Instructions: Round your responses to the nearest whole number. a. Calculate GDP. b. If a value-added tax (a tax on the total value added by each firm) of 15 percent is introduced, how much revenue will the government get? %24 c. How much would government get if it Introduced an income tax of 15 percent? d. How much would government get if it Introduced a sales tax of 15 percent on output?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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