An increase in taxes of a specific amount will have a smaller impact on the equilibrium gdp than will a decline in government spending of the same amount because:

- disposable income will fall by some amount smaller than the tax increase.
- declines in government spending always tend to stimulate private investment.
- some of the tax increase will be paid out of income that would otherwise have been saved.
- the mpc is smaller in the private sector than it is in the public sector.

Make or buy eastside company incurs a total cost of $120,000 in producing 10,000 units of a component needed in the assembly of its major product. the component can be purchased from an outside supplier for $11 per unit. a related cost study indicates that the total cost of the component includes fixed costs equal to 50% of the variable costs involved. a. should eastside buy the component if it cannot otherwise use the released capacity? present your answer in the form of differential analysis. use negative sign represent a net disadvantage answer; otherwise do not use negative signs with your answers. cost from outside supplier $answer variable costs avoided by purchasing answer net advantage (disadvantage) to purchase alternative $answer b. what would be your answer to requirement (a) if the released capacity could be used in a project that would generate $50,000 of contribution margin? use negative sign represent a net disadvantage answer; otherwise do not use negative signs with your answers.