Explain how a value-added tax (VAT) works and how it differs from a sales tax. What impact does a VAT have on government revenue and the price of products paid by consumers?
A VAT is a tax applied to the value added at each stage of production. A sales tax is applied to the final dollar amount paid by the consumer, and is therefore more visible to consumers. A VAT serves to raise revenue for the government, and it raises the price of products paid by consumers.
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If a firm's total revenue just covers its implicit and explicit costs of production, then
A. the economic cost of production exceeds total revenue. B. accounting profit is zero. C. economic profit is zero. D. total revenue exceeds the economic cost of production.
A perfectly competitive firm is earning an economic profit when total fixed costs increase. Assuming the firm does not shut down, in the short run the firm will
A) charge a higher price. B) produce more output so the extra revenue will cover the increased costs. C) produce less output to decrease total costs. D) continue producing the same quantity as before but will make less economic profit. E) continue producing the same quantity as before and continue making the same economic profit as before.
The U.S. GDP includes
A. wine harvested and bottled in California. B. increases in the divorce rate. C. time spent studying for an exam. D. the exchange of four shirts for four skirts at a consignment store.
If a person is going to borrow $30,000 for a car and pay it off in monthly payments of $713.70 for 5 years, the internal rate of return is
A. 15%. B. 10%. C. 5%. D. 0%.