Assume that the production chain for an economy is characterized by the following transactions:

Business Type Purchases Sales

Mine $0 $ 200

Steel Mill 200 1,000

Car Maker 1,000 5,000

Car Dealer 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?