the government in mortorania buys $20 million in goods and services,collects $15 million in taxes,and borrows the remaining $5 million.its taxes produce no dead weight costs.what is the cost of government in mortorania?
To determine the cost of government in Mortorania, we need to consider the total expenditure of the government, which is the sum of their purchases and borrowing, minus their tax revenue.
Given:
Government purchases: $20 million
Tax revenue: $15 million
Borrowing: $5 million
To calculate the cost of government, we add the purchases and borrowing, and then subtract the tax revenue:
Cost of Government = (Government purchases + Borrowing) - Tax revenue
Cost of Government = ($20 million + $5 million) - $15 million
Cost of Government = $25 million - $15 million
Cost of Government = $10 million
Therefore, the cost of government in Mortorania is $10 million.