Question 2: Imposing a single-stage tax Assume that there are 1000 importers and manufacturers, 2,000 wholesalers, and 10,000 retailers. Each manufacturer (importer) has sales of $30,000,000 which is sold equally across wholesalers, and wholesalers put a 20% markup on the price before selling to retailers Then the goods are resold equally to 10,000 retailers and the retailers impose a 25% markup on it. Suppose the government needs to raise 4.5 billion with a single- stage sales tax, a. What would be the rate of tax the government needs to impose on the sales of importers and manufacturers to achieve the revenue target. b. What would be the rate of tax the government needs to impose on the sales of wholesalers to achieve the revenue target?

Question 2: Imposing a single-stage tax Assume that there are 1000 importers and manufacturers, 2,000 wholesalers, and 10,000 retailers. Each manufacturer (importer) has sales of $30,000,000 which is sold equally across wholesalers, and wholesalers put a 20% markup on the price before selling to retailers Then the goods are resold equally to 10,000 retailers and the retailers impose a 25% markup on it. Suppose the government needs to raise 4.5 billion with a single- stage sales tax, a. What would be the rate of tax the government needs to impose on the sales of importers and manufacturers to achieve the revenue target. b. What would be the rate of tax the government needs to impose on the sales of wholesalers to achieve the revenue target?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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