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You are an assistant to a senator who chairs an ad hoc committee on reforming taxes on telecommunication services Your best estimates indicate that based on current tax rates

You are an assistant to a senator who chairs an ad hoc committee on reforming taxes on telecommunication services. Your best estimates indicate that, based on current tax rates, the monthly market demand for telecommunication services is given byQD = 300 - 4P and the market supply is given byQS = -120 + 3P, whereP is the monthly price of telecommunication services. The senator is considering tax reform that would dramatically cut tax rates, leading to a supply function under the new tax policy ofQS = -120 + 3.2P. How much money per unit (i.e. based on equilibrium price) would a typical consumer save each month as a result of the proposed legislation? Show calculations to support your answer.

May 01 2020 View more View Less

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