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.

Question

Quizplus · Accepted Answer

The GST is calculated on the value added by the firm, which is the sales revenue minus the cost of inputs. The value added is $7500 - $3000 = $4500. The GST at 5% on $4500 is $4500 * 0.05 = $225.

Suppose a Firm Buys $3000 Worth of Inputs from Other