Table 6-6 shows the different stages in the production of an office building. A mining firm extracts iron from the earth. A steel mill converts the iron to steel beams for use in construction. A construction company uses the steel beams to make a building. Assume that the total product of these firms represents the only components of the building and that they will have no other uses.
Table 6-6

-Refer to Table 6-6. Suppose the value added tax is 10%. What is the amount paid by Fuller Mill to Acme Mining?
A) $100,000
B) $110,000
C) $215,000
D) $225,000

Question

Table 6-6 shows the different stages in the production of an office building. A mining firm extracts iron from the earth. A steel mill converts the iron to steel beams for use in construction. A construction company uses the steel beams to make a building. Assume that the total product of these firms represents the only components of the building and that they will have no other uses.
Table 6-6
 
-Refer to Table 6-6. Suppose the value added tax is 10%. What is the amount paid by Fuller Mill to Acme Mining?
A) $100,000 
B) $110,000 
C) $215,000 
D) $225,000

Quizplus · Accepted Answer

If the value added tax is 10%, Fuller Mill would pay Acme Mining the original amount plus 10% VAT. Assuming the original amount is $100,000, the total payment would be $100,000 + ($100,000 * 0.10) = $110,000.

Table 6-6 Shows the Different Stages in the Production of an Office