Reference no: EM132518173

You are an assistant to a senator who chairs on an ad hoc committee on reforming taxes on telecommunication services. Based on your research, AT&T has spent over $15 million on related paperwork and compliance costs. Moreover, depending on the locale, telecom taxes can amount to as much as 25 percent of the customers phone bill. These high tax rates on telecom services have become quite controversial due to the fact that the deregulation of the telecom industry has led to a high competitive market. Your best estimates indicate that, based on current tax rates, the monthly market demand for telecommunication services is given by Qd = 200 - 5P and the market supply (Including taxes) is QS = 3P - 140 (Both in millions). Where P is the monthly price in telecommunication services.

The Senator is considering tax reform that would dramatically cut tax rates, leading to a supply function under the new tax policy of QS = 3.2P - 140. How much money per unit would a typical consumer save each month as a result of the proposed legislation?

Instruction: Enter your response rounded to the nearest penny (two decimal places)