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There are three firms in an economy: A, B, and C. Firm A buys $250 worth of goods from firm B and $200 worth of goods from firm C and produces 200 units of output, which it sells at $5 per unit. Firm B buys $100 worth of goods from firm A and $150 worth of goods from firm C and produces 300 units of output, which it sells at $7 per unit. Firm C buys $50 worth of goods from firm A and nothing from firm B. It produces output worth $1,000. All other products are sold to consumers.

a. Bif, a tax on total value added of each firm (value-added tax) of 10 percent is introduced, how much revenue will the government get?
b. How much would the government get if it introduced a 10 percent income
tax?
c. How much would the government get if it introduced a 10 percent sales tax on
final output?
 
 

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Retselisitsoe Pokothoane
Retselisitsoe PokothoaneLv10
28 Sep 2019

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Related questions

There are three industrial firms in Happy Valley.

The government wants to reduce pollution to 90 units, so it gives each firm 30 tradable pollution permits.

Because the firm (A, B, C) has the highest cost of reducing pollution by 1 unit, it would like to (sell 30 permits to, buy 30 permits from) another firm. Because the firm (A, B, C) has the lowest cost of reducing pollution by 1 unit, it is willing to (sell 30 permits to, buy 30 permits from) the firm with the highest cost.

Complete the second column of the following table by indicating who buys and sells permits in this case. Complete the fourth column of the table with the number of permits each firm ends up with after trading with the others. Next, subtract the number of permits from the initial pollution level to determine how many units of pollution reduction each firm has to complete, and enter these values into the fifth column of the table. Next, determine the total cost of reducing the pollution levels you determined in the previous column, and enter that into the final column of the table. Finally, add up the total pollution reduction costs for each firm and enter the total amount in the final cell of the total row in the following table.

NOTE: In the buys or sells columns, the options are buys, sells, or neither buys or sells.

If permits could not be traded, firm A would have to remove (number) units of pollution at a total cost of (number), firm B would have to remove (number) units of pollution at a total cost of (number), and firm C would have to remove (number) units of pollution at a total cost of (number). The overall cost of reducing pollution, in this case, is (number), which is (higher, lower) than with tradable permits.

QUESTION 1

If a real asset located in Brazil is sold to someone in the US, the transaction would result in a credit in Brazil's balance of payments.

True

False

6.25 points

QUESTION 2

The balance of payments for a given nation records

only imports and exports of good and servies

only foreign direct investment and portfolio investments between nations

both imports and exporst of good and servieces as well as forein direct investment and portolio investments between nations
QUESTION 36.25 points

Transactions between Canada and the rest of the world are shown below. Use the following information to answer the next four questions.

Canadian citizens receive C$5 million worth of dividends from foreign investments.

Imperial Oil (Canadian firm) invests C$60 million in overseas oil discovery.

Foreign tourists spend C$45 million in Canada.

Canadian government sells C$20 million worth of treasury securities to foreign nations.

Alcan (Canadian firm) sells C$8 million worth of aluminum to US companies.

Canadian government buys C$32 million worth of gold.

Canadian firm buys C$12 million worth of computer components from Sony.

Canada sends C$4 million in aid to Mexico.

Ford spends C$30 million in constructing an assembly plant in Canada.

Find Canada's balance of trade. Enter your final answer in terms of millions of dollars. Do not enter a non-numerical value when inputting your answer.

6.25 points

QUESTION 4

Find the capital account balance (in millions of C$).

-39

19

70

6.25 points

QUESTION 5

Find Canada's current account balance. Enter your final answer in terms of millions of dollars. Do not enter a non-numerical value when inputting your answer.

6.25 points

QUESTION 6

Canada's capital account balance suggests that it is a net supplier of capital to the rest of the world.

True

False

6.25 points

QUESTION 7

Suppose a nation has a current account surplus. This surplus implies

ation

ation

none of the above

6.25 points

QUESTION 8

Suppose that the value of the dollar moves from £=$1.5 to £=$1.75. What effect would this have on the UK's balance of trade, all else being equal?

UK

UK

UK

6.25 points

QUESTION 9

There is an inverse relationship between the demand for US exports and the US inflation rate.

True

False

6.25 points

QUESTION 10

Transactions between Great Britian and the rest of the world are shown below. Use the following information to answer the next two questions.

British companies sell 50 million pounds worth of bonds to foreigners.

British government sells 20 million pounds of treasury securities to foreigners.

British citizens receive 2 million pounds in interest from foreign investments.

British companies buy 85 million pounds worth of American produced steel.

GlaxoSmithKline (British firm) sells 40 million pounds of pharmaceutical drugs abroad.

British government buys 15 million pounds of gold in FX market.

British bankers invest 12 million pounds in foreign banks.

Find Great Britian's balance of trade. Enter your answer in terms of millions of pounds. Do not use the pound sign or any other non-numerical value when inputting your answer.

and

Transactions between Great Britian and the rest of the world are shown below. Use the following information to answer the next two questions.

British companies sell 50 million pounds worth of bonds to foreigners.

British government sells 20 million pounds of treasury securities to foreigners.

British citizens receive 2 million pounds in interest from foreign investments.

British companies buy 85 million pounds worth of American produced steel.

GlaxoSmithKline (British firm) sells 40 million pounds of pharmaceutical drugs abroad.

British government buys 15 million pounds of gold in FX market.

British bankers invest 12 million pounds in foreign banks.

Find Great Britian's balance of trade. Enter your answer in terms of millions of pounds. Do not use the pound sign or any other non-numerical value when inputting your answer.

Suppose the government of Washington is considering the addition of a new tax on firms. You have been called in to provide expert analysis on how such a tax would affect the employment of labor. There are 3 proposals the government is considering:

1. A tax on every hour an employee works (e.g., \X" cents per hour).

2. A tax on some percentage of the value of the rm's buildings, land, and machinery (e.g.,

\Y" percent of the total property value).

3. A tax on every unit of output a firm produces (e.g., \Z" cents per unit of output).

While all the plans have the potential to reduce employment opportunities, which plan would

probably have the most favorable impact on the employment of labor? Briefly explain your reasoning.

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