Question 1: The economics of sales tax and online shopping (Learning Outcomes: ULOI/GLOI, UL02/GL03 and UL03/GL04) Imagine a company, A, that sells goods through its physical stores as well as an online trading platform. Initially there is no sales tax on goods irrespective of whether they are sold through online or physical stores. Then assume the government imposes a sales tax of $2 per unit of the good (assuming a fixed amount of tax) only on goods which are sold at the physical store. The company collects the following data on its sales, which is provided in the following Table 1: Table: 1 Price per unit of goods Quantity sold at Before sales Tax After sales Tax at Physical store $7 $8 physical store 3 2 Quantity sold via online at price $7 per unit (as they are not subject to sales tax) 6 8