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WAEC Economics 2015 Question 29

Question 29

Public Finance

Ten bags of wheat bought for $50 by a flour miller were sold for $65. What is the Value Added Tax payable by the flour miller if the tax rate is 5%?

  1. A.$7.50
  2. B.$3.25
  3. C.$2.25
  4. D.$0.75.
Show the answer and explanation

Answer: D ($0.75.)

Explanation

Value added = 65 − 50 = $15; VAT = 5% × 15 = $0.75.