telecom taxes is 25 percent of the consumers bill monthly market demand is Qd =

Question

telecom taxes is 25 percent of the consumers bill monthly market demand is Qd = 250 - 5P market supply is Qs= 4P -110 ( both in millions) where P isthe monthly price of telecommunication services. The senator is considering tax reform that will cut tax rates,leading to a supply function under the new tax policy of Qs =4.171P - 110. How much money will a typical consumer save eachmonth as a result of the proposed legislation? telecom taxes is 25 percent of the consumers bill monthly market demand is Qd = 250 - 5P market supply is Qs= 4P -110 ( both in millions) where P isthe monthly price of telecommunication services. The senator is considering tax reform that will cut tax rates,leading to a supply function under the new tax policy of Qs =4.171P - 110. How much money will a typical consumer save eachmonth as a result of the proposed legislation?

Explanation / Answer

You determine price by setting supply equal to demand equal. 250 - 5P = 4P - 110 9P = 360 P = 40 Now do it again with the new supply curve. 250 - 5P = 4.171P - 110 9.171P = 360 P = 39.25 So the average customer will save 75 cents.

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