Assignment:
Only provide your opinions when specifically called for. In all other cases your answer(s) should rely on the text and module materials and not on the internet, showing your capacity to apply the appropriate economic principles and concepts correctly.
In 2014, a major ice storm hit the southeastern U.S.. The storm brought down power lines and trees, cutting electricity in many areas, making travel difficult, and slowing down repair crews. Heating homes became a major challenge. The storm created shortages of power generators. As a result, those products sold at prices much higher than normal. These high prices provoked cries of "price gouging" and calls on the government to impose price controls to prevent gouging. While no one likes to pay a higher price than normal for something, consider what would have happened with a price ceiling. The economic intuition is revealing. Draw a graph showing the market for generators with an equilibrium price at $250. Now impose a price ceiling at $200 per generator. What would be the impact of the price ceiling on the quantity demanded? On the quantity supplied? Who would benefit from the price ceiling and who would be harmed? Let the graph guide your thinking. Don't start with your gut reaction! Did the price ceiling help the people it was designed to help? Explain the economic reasoning behind your analysis.
Instructions
Only provide your opinions when specifically called for. In all other cases your answer(s) should rely on the text and module materials and not on the internet, showing your capacity to apply the appropriate economic principles and concepts correctly.
A key skill in economics is the ability to use the theory of supply and demand to analyze specific markets. In this discussion, you get a chance to demonstrate your ability to analyze the effects of several "shocks" to the market for coffee.
1: Suppose that the U.S. government reduces the tariff on imported coffee, and a reputable study is published indicating that coffee drinkers have lower rates of colon cancer. What will the combined impact be on the equilibrium price and quantity of coffee? Explain your reasoning and show graphically the impact of these effects. Make sure you think this through carefully! (Photos of your work or those created by hand are not acceptable!) If you need help with graphing see the tutorial in the section above the module Power Point.
Only provide your opinions when specifically called for. In all other cases your answer(s) should rely on the text and module materials and not on the internet, showing your capacity to apply the appropriate economic principles and concepts correctly.
1. What are the primary principles of taxation?
2. Describe the percentage of the tax taken on regressive, proportional, and progressive taxes in relation to income.
3. What is a sales tax and is it a regressive, proportional, or progressive tax?