The government has decided to increase the basic business tax of all firms by 5%. Once again, 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:
A. Set forth and describe 2 general courses of action (that could be applied to any firm) youbelieve would be helpful to the firm in cutting costs to help absorb the tax increase and notsuffer any net losses.

The two strategies that the company can adopt to reduce the impact of rising tax rate on profits is by selling its product in in countries with low tax rates and increasing production

Explanation:

The business could consider selling its products in neighboring countries whose tax rates are quite low but the extra costs of doing so must be weighed against resulting benefits.

By increasing its production,fixed costs can be covered over a large number of output,hence fixed cost per unit drops leading a lower cost per unit of product and invariable higher profit per unit.