answer in 250 words 1

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CHOOSE ONE OF THE FOLLOWING OPTIONS TO WRITE ABOUT:

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Write a short (250 word minimum) essay on one of the following topics:

Option A

FICA taxes are intended to be split evenly between the worker and the employer. Based on what you know of tax incidence:

  • Do you expect the tax to be split evenly?
  • If not, who will pay more: workers or employers?
  • Explain your answers above.
  • How can employers make workers effectively pay more of the FICA tax if the tax rate is set by law?
  • Is there any way to change the distribution of the tax? Explain.

Option B

You are the proprietor of a small convenience store in a small town. A tropical storm is expected to hit your community tomorrow. This storm will knock out power for a few days and will cause transportation problems, so no new goods will be shipped into the country. You currently have the following goods in stock:

  1. Milk
  2. Batteries
  3. Magazines
  4. Beer
  5. Candy
  6. Towels
  7. Frozen snacks
  8. Bags of ice

In your essay, answer the following:

  • Do you expect demand to increase for any of the goods you have in stock? Explain which, if any, and why.(Refer to the determinants of demand from chapter 4)
  • Which goods do you expect to have a lower elasticity of demand, and which do you expect to have a higher elasticity of demand? Explain your answers. (Refer to the determinants of elasticity from chapter 5)
  • Will you raise prices on some or all of these goods? If so, which ones? Explain your answers.
  • How do your answers regarding demand affect your pricing decisions?
  • How do your answers regarding demand affect your pricing decisions?
  • Will your pricing decisions increase or decrease market efficiency? Explain.
  • Are your pricing decisions fair? (This is a purely subjective question.) Does fairness enter into your decision making? Explain how and why.

 

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