Saturday, June 27, 2009

Unit 1: The effect of a VAT cut on restaurant meal sales

France is reducing the VAT on retaurant meals in France according to this BBC clip

http://news.bbc.co.uk/1/hi/uk/8125696.stm

a) Using a S&D diagram, explain the anticipated effect on the market for restaurant meals on the reduction in VAT
b) To what extent will such a VAT cut effect the market?

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