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Fri 4 Jan, 2013 04:25 pm
Scenario!
Suppose, 3G group of industries, a new entrant in handicraft industry, starts business in rural area. This industry manufactures handicrafts from pure wood. Handicraft manufacturing through synthetic material leads to environmental degradation. That’s why environment ministry has imposed a tax on the handicraft industry involved in manufacturing of all kinds of synthetic products.
Q1. How would imposition of tax on synthetic products affect 3G group of industries in particular and overall handicrafts industry in general?
Q2.Given that 3G group of industries is working in rural area, which economic benefits this industry would get in the long run? Give answer by using concepts of long-run production and cost theory.
Thanks.
@sofia mercedez,
First of all u r asking about your assignment answer so Here it is
1. 3g group would not effected as they are producing handicrafts from pure wood while tax is imposed on synthetic materials.while overall industry will be effected as cost will increase which results in high prices and lower the sell.
2. 3g is in rural area it will easy for it to get expand in size in long run and get cheap labor.Also low rate of taxation and land.
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