Answer:
a.- 20,500 less tax collected
b.- 1,750 less tax collected
c.- 26,750 less tax collected
Explanation:
<u>under a static forecast:</u>
205,000 x (0.35-0.25) = 205,000 x 0.1 = 20,500
The government will collect 20,500 less dollars from Ms BK's
<u>under a flexible forecast:</u>
205,000 x 35% - 280,000 x 25% = 71,750 - 70,000 = 1,750
It will loss tax revenue for $1,750
205,000 x 35% - 180,000 x 25% = 71,750 - 45,000 = 26,750
