EBK ECONOMICS OF PUBLIC ISSUES
20th Edition
ISBN: 9780134532295
Author: NORTH
Publisher: YUZU
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Chapter 2, Problem 5DQ
Suppose you are about to start an innovative, high-tech company in one of two states. You expect before-tax profits to be about $100,000 per year. Both states have similar living conditions, climate, and other amenities, but the tax rate in state A is 17 percent, while the tax rate in state B is 7 percent. By how much will your annual after-tax profits differ between the two states? From a business perspective, which state is a preferred location?
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Hello Professor,
A rise in consumption in the economy would cause an increase in aggregate demand. Therefore, when consumers spend money on everyday goods and services, it not only helps to stimulate economic growth, but it could also present potential issues like unsustainable debt levels or inflation. I believe that it would be beneficial to consider such factors and adopt a purchasing strategy to help navigate the challenges posed by inflation or unsustainable debt levels.
First, do you think our business will be affected because inflation is rising? How?
Yes, I do believe that the business will be affected because of inflationary pressures. Inflation rising will affect the cost of goods, services, and labor, which could lead to higher operating expenses. The potential reduction of profit margin because of inflation could lead to a smaller percentage of revenue being retained as profit. Therefore, inflation rising will force us to raise prices for…
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EBK ECONOMICS OF PUBLIC ISSUES
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