A manufacturer is considering building a new factory. The government reduces the rate of corporation tax.
| Information | Before the tax cut | After the tax cut |
|---|---|---|
| Expected annual profit from the factory before corporation tax | £8 million | £8 million |
| Corporation tax rate | 24% | 18% |
The manufacturer will build the factory if its expected annual profit after corporation tax is at least £6.4 million.
Using the information, explain whether the corporation tax cut is likely to achieve its intended supply side effect.
121 exam-style questions on OCR GCSE Economics 3.7 Supply side policies, covering 3.7.1 What are supply side policies and 3.7.2 Costs and benefits of supply side policies. Each one has a worked solution and a mark scheme showing where the marks go.