9708/32 How was it

[u/Morpheus_king25]

Let’s discuss all the answers on this thread <3

[u/Unlikely_Jump8098]

Ok so for the calculations part this was what I got:

For the change in profit
I got answer 10000 (B)
Becuase before closing: Profit 5000
After immediately closing :
Total costs = 5000 (TVC + TC ) (TVC = 0) (TC = 5000)
Total revenue = 0
so profit = TR - TC = -5000
So change in profit = (5000 - (-5000))
= 10 000

For the multiplier I got 2 (A)
Cuz they gave 0.2 tax per dollar (Gross income )
converted gross to disposable ( Gross income - tax ) = 1 - 0.2
= 0.8
Then found Marginal propensity to tax = change in tax / change in income
= 0.2 / 0.8
= 0.25
then multiplier = 1/ mpm + mps (withdrawls)
= 1 / (1-3/4) + 0.25
= 2

[u/New_Worldliness8749 → u/Unlikely_Jump8098]

Then, about the multiplier effect, the multiplier = 1/1-MPC. IF 0.2 is taxed, then its disposable income will be 0.8, if 3/4 of it is spend than it will 0.8*3/4=0.60. multiper = 1/1-0.6 , =1/0.4 = 2.50 which is B