Answer Happy

Consider an organisation that forms part of the competitive IT services market. While preparing the sales forecast for the coming year, the government announces an increase in sales tax. How will this announcement affect the demand and supply of the services delivered by the organisation? Answer the following questions: 3.1 Draw a graph indicating the original market for the service (ie, with a standard demand curve, and a standard supply curve). Mark the equilibrium point as A. 3.2 Using the graph drawn to answer Question 3.1, indicate the change that will occur due to the government's intervention in the market. Show this by illustrating the shift in the supply curve. Mark the new equilibrium point as B. 3.3 Consider the effect of the change in equilibrium price on the sales forecast. How will the change in price affect the demand for the service delivered by the organisation? Is there a way to counteract the effect? Your answer should be between 50 and 75 words in length.