Suppose a Firm Buys $3000 Worth of Inputs from Other

question 69

Multiple Choice

Suppose a firm buys $3000 worth of inputs from other firms,hires $2000 worth of labour services,and has sales revenue of $7500.The firm's resulting profit is $2500.If the GST (a value- added tax) rate is 5%,this firm will pay in GST.

• A)$2500
• B)$0
• C)$225
• D)$375
• E)$125

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Definitions:

Seller Surplus

The difference between the amount sellers are willing to accept for a good or service and the amount they actually receive.

Unconsummated Transaction

A deal or negotiation that has been discussed or agreed upon in principle but has not been finalized or completed.

Sales Tax

a tax imposed on sales of goods and services, typically calculated as a percentage of the purchase price.

Buyer Surplus

The difference between the maximum amount a consumer is willing to pay for a good or service and the actual amount paid.