Question
Assume that the economy of a country is currently producing 1,000 units of goods and services at a price of $10 per unit. The government
Assume that the economy of a country is currently producing 1,000 units of goods and services at a price of $10 per unit. The government of the country decides to implement a new policy to increase the production of goods and services. The policy involves a 10% reduction in taxes for all businesses in the country. As a result, the production of goods and services increases to 1,200 units. Calculate the following:
a) The price of goods and services after the implementation of the policy.
b) The total revenue generated before and after the implementation of the policy.
c) The percentage change in total revenue after the implementation of the policy.
d) The total revenue generated by the government before and after the implementation of the policy.
e) The percentage change in total revenue generated by the government after the implementation of the policy.
Step by Step Solution
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The detailed answer for the above question is provided below a The price of goods and services after the implementation of the policy can be calculated using the formula Price Total Revenue Quantity Before the policy the price was 10 and the quantity was 1000 units After the policy the quantity increased to 1200 units Assuming that the demand for goods and services remained constant we can calculate ...Get Instant Access to Expert-Tailored Solutions
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Step: 3
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