Suppose a firm has an annual budget

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In order to host the Winter Olympic Games, the city of Vancouver incurred a large debt, which will have to be repaid over time. Reflecting on this fact, one Vancouver resident complained, “The average guy is going to see his taxes increase” [Austen, 2010] Who is going to bear t he burden of these future taxes? [Hint: Take advantage of the theory of tax capitalization.]Suppose a firm has an annual budget of $200,000 in wages and salaries, $75,000 in materials, $30,000 in new equipment, $20,000 in rented property, and $35,000 in interest costs on capital. The owner/manager does not choose to pay himself, but he could receive income of $90,000 by working elsewhere. The firm earns revenues of $360,000 per year.

To receive a normal profit, the firm described above would have to

Experience $10,000 less in cost.

Receive $90,000 more in revenue.

Receive $10,000 more in revenue.

Do nothing since it already earns a normal profit.

Reference no: EM13736717

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