The government has decided to increase the basic business tax of all firms by 5%.
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The government has decided to increase the basic business tax of all firms by 5%. You are hired as a consultant to a firm, but this firm cannot pass along the cost of the tax increase to its customers by way of a price increase of its product because most customers will significantly reduce their purchases. Based on what you have learned in your study of microeconomics describe 2 general courses of action (that could be applied to any firm) you believe would be helpful to the firm in cutting costs to help absorb the tax increase and not suffer any net losses.
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