A consumer values a car at $500,000 and a seller values the same car at $400,000.

A. If sales tax is 10% and is levied on the seller, then determine the seller's bottom line price.

B. If sales tax is levied on the buyer, then determine the tax rate knowing that the buyer's top-dollar is $416,666.

Expert Solution

Answer A:- The tax is 10%

so the amount to be paid on tax = 0.1*$400,000= $40,000

so the seller's bottom line price = $400,000+$40,000= $440,000

Answer B:- If the sales tax is levied on buyer, then

Buyer's top dollar value = $500,000/110 =$454545.45

Rahul Sunny answered 2 years ago

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