Q1. The sales tax rate applied to all purchases within a state was 0.04 (4 percent) throughout 2006 however increased to 0.05 (5%) during all of 2007. The state government collected all taxes due, but its tax revenues were equal to $40 million each year. What happened to the sales tax base between 2006 and 2007? What could account for this result?

Q2. Suppose you have a production technology that can be characterized by a learning curve. Every time you increase production by one unit, your costs decrease by $6. The first unit costs you $64 to product. If you receive a request for proposal (RFP) on a project for four units, what is your breakeven price?