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(1) Assume that the production chain for an economy is characterized by the following transactions: Purchases SO Business Type Mine Steel Mill Car Maker Car
(1) Assume that the production chain for an economy is characterized by the following transactions: Purchases SO Business Type Mine Steel Mill Car Maker Car Dealer 200 1,000 5,000 Sales $ 200 1,000 5,000 11,000 Assume further that the only transaction where a non-business is involved is in the sales of cars from car dealers to individuals (i.e., the individual consumer is not a business). Answer the following questions (a) If the mine is subject to a 15 percent value-added tax (VAT), how much would it pay in taxes? (b) If the car dealer is subject to a 15 percent retail sales tax, how much would it pay in taxes? (C) If the car dealer is subject to a 15 percent VAT, how much would it pay in taxes? (d) How much more revenue does a 15 percent VAT collect, compared to a 15 percent retail sales tax
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