Assignment
There is no "team element" to this test, each student is to answer the following 5 questions. All answers must be in a single file in Word. My suspicion is that each answer is about one page or less, please 12 point font and line spacing at 1.5 or 2.0. Your submitted exams will be analyzed by turn-it-in dot come to authenticate originality.
1. Review this document prepared by the Congressional Research Service "The 2017 TaxRevision(P.L. 115-97):Comparison to 2017 Tax Law". Use the information cited in the reading) and your knowledge of supply and demand to answer the following questions. You need to put 2 citations from the document in each of a. and b. below justifying some change in the market indicated. Be sure to cite by page number and by copying and pasting the language from the document when creating your answers.
a. Other things being equal, what is the impact of the tax reform on the nation's housing market, i.e. the market for single family homes?
b. Other things being equal, what is the impact of the tax reform on the financial markets where borrowers and lenders interact? If you don't want to use a general "loanable funds model approach" identify one particular lending market or any device that links borrowers to lenders. You cannot use the mortgage market.
2. Produce an example from your life or career of a situation where you faced a strategic decision along the lines of a game theoretic environment. If you are not comfortable doing that then please construct a reasonable example situation. You must have 2 players in the game you and another entity. The actions of neither player are known with certainty and there is no way to put a probability statement on either strategy. Limit your example to 2 players and 2 strategies. Fully describe the payoffs as you describe your game present your game in a matrix or tabular format such as found in the textbook something like Table 10.2. You might use as your 2 players you and some "group" of people, firms, or society. It is very helpful if the payoffs can be expressed as numbers of some form, but don't let that stop you. Do not use games of chance with known probabilities or then it isn't really a game we are talking about. So please don't write about "One night at the Horseshoe casino...." I am not asking to delve into the details of your life to any degree further than you are willing to share with your classmates. Your example must be different from examples used in class and the payoffs must not be symmetric, i.e. the numbers in the diagonal elements of the matrix should not be equal.
a. Present your game in "tabular" or "matrix" format showing the players, their strategies, and the outcomes.
b. Identify if your game leads to a prisoners' dilemma type outcome. It may, or it may not.
c. Outline the outcome of the game and the strategies that each player pursued. You don't have to say whether you "won" or "lost" the game.
d. Was this outcome the "best" for you and the other player combined or was there an outcome where, in some sense, you both collectively would have benefitted more? Fully explain.
3. This is a question for which there is unlikely a unique set of answers. Instead the value of an answer will depend upon its validity and support. For each of the four reasons you identify below you are required to provide a citation that is not from a textbook, but is from a credible source. If your reasons are based on a graphical argument, you must include the graph, appropriately cited, in a graphic in your submitted answer.
a. Provide two reasons why you would argue that monopolies or firms with market power (i.e. facing downward sloping demand curves) are a positive impact on society and the economy.
b. Also provide two reasons why you would argue that monopolies or firms with market power (i.e. facing downward sloping demand curves) are a negative impact on society and the economy.
4. The current debate about tariffs is certainly prompting a lively debate in the media and in analysts circles around the world. Please answer each of the components below which center on this issue. Where indicated provide a citation of sources for facts that you present.
a. Using a supply and demand approach in the domestic (US) market for steel and aluminum show the price effects of the tariff on steel and aluminum sold in the U.S. Yes you are required to include a graph and a full explanation of the graph.
b. We have heard "one side" in the debate say that a tariff is justified because it protects US workers. Please "find" those workers in the diagram you made for part a. above.
c. It is thought by some that other countries will either raise or create tariffs on US goods sold in those countries or implement some other type of trade barrier. Find at least 3 examples of goods that face some form of entry barriers or tariffs by other countries - the entry barriers may be a tariff or they may be some non-tariff force that blocks US goods from being imported by those countries.
Instead of 4b. and 4c. above do the following
Create a game theoretic approach type of analysis of the issue. The 2 players are the US and the EU. The strategies are US - no tariffs such as those recently enacted, US - tariffs such as those recently enacted. The strategies by the EU are to impose no new tariffs or trade barriers in response or for the EU to impose new tariffs or trade barriers in response. Do the analysis of the outcomes to see if each player has a "best strategy". Explain.
5. Using the data on international trade identified in class. Create a bar chart or a pie chart showing the % of US exports to its 9 main exporting partners.