Writing Requirements (APA format)
- 2 pages (approx. 300 words per page), not including title page or references page
- 1-inch margins
- Double spaced
- 12-point Times New Roman font
- Title page with topic and name of student
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Read/review the following resources for this activity:
- Textbook: Chapter 6, 8
- No outside sources are required
In this paper, you will apply what you have learned in Chapter 6 to the firm or business you selected in order to see how the concepts can be applied to a business situation.
Keep in mind that throughout this course, papers are intended to bring real-world situations to the course material that we are covering each week. Part of your grade will depend on the connections you make between your chosen firm (which could include the economic environment of your chosen firm, the markets in which your chosen firm interacts with outside actors, the decisions your chosen firm makes, etc., depending on the particular question) and the material from the chapters we covered.
Be sure to address both parts of the assignment.
For the particular firm/business you selected, explain how a tax or an increase of an already existing tax on the good the firm produces would affect the price and quantity sold of the product. How might a firm change their decisions regarding the price or amount of the good to produce? What would you expect the incidence of the tax to be? Would it fall mostly on the buyers or seller? Would you expect the number of sales to change significantly or not? What would happen to the firm’s profit? Explain.
Next consider a tax on an input your firm uses. What would happen to the price your firm needs to pay for that input? Given the model of Supply and Demand from chapter 4, what would happen to the supply of your firm’s product and what would happen to the price and quantity of sales? Can you say anything about the firm’s profit in this case?