Question: You are an assistant to a senator who chairs an ad hoc committee on reforming taxes on telecommunication services. Based on your research, AT&T has spent over $ 15 million on related paperwork and compliance cost. Moreover, depending on the locale, telecom taxes can amount to as much as 25 percent of a consumer’s phone bill. These high tax rates on telecom services have become quite controversial, due to the fact that the deregulation of the telecom industry has led to a highly competitive market. Your best estimates indicate that, based on current tax rates, the monthly market demand for telecommunication services is given by Q ^D =250-5P and the market supply (including taxes) is Qˢ=4P-110 (both in millions), where P is the monthly price of telecommunication services. The senator is considering tax reform that would drastically cut tax rates, leading to a supply function under the new tax policy of Qˢ=4.171P-110. How much money would a typical consumer save each month as a result of the proposed legislation?

Price: $2.99

Solution: The downloadable solution consists of 1 pages
Deliverable: Word Document