The Local Community Is Considering Two Options to Raise Money

question 55

Essay

The local community is considering two options to raise money to finance a new civic center. The first option is to institute a per unit tax on restaurant meals of $2.46. The market demand and supply functions for restaurant meals are: Q_D = 800,000 - 6,000P and Q_S = 14,500P - 225,000. Calculate consumer and producer surplus with the per unit tax. The second option the community is considering implementing is an income tax. If an income tax is implemented, the new demand for restaurant meals is: Q'_D = 794,875 - 6,000P. Calculate the level of consumer and producer surplus in the restaurant market with the income tax. Which of the two options will reduce the sum of consumer and producer surplus the least?

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Definitions:

Frequency of Sales Calls

The number of times sales representatives contact prospects or customers within a given period to promote their products or services.

Development Sales Territories

The process of organizing and dividing a geographical area or market into specific segments or territories for more efficient sales management and targeting.

Inefficient

Lacking in effectiveness or the ability to produce a desired outcome without wasting materials, time, or energy.

Networking

The act of interacting with others to exchange information and develop professional or social contacts.