At the point the social cost [s1] is not taken into account only the private cost is. They are only thinking of their profits. However, if a good is to be taxed, it would increase the prices of the good for the consumers, which would mean p increases to p1 and as a result d shifts to d1 to the left. The demand is decreased. (diagram showing this- didn’t do it on word) On the contrary, if goods such as cigarettes have been taxed and prices increase, the demand would not have been affected by a great load, this is due
As the producer creating the externality does not take it into account and the consumer does not fully pay for the resulting externalities, market inefficiencies result in the form of market failure. The social costs imposed upon third parties can be alleviated by the imposition of an indirect tax on Petrol and Diesel which will in turn increase the costs of producers (P1->P2) and discourage production, causing supply to shift to the left (Q1->Q2). This occurs as the indirect taxes increase the costs of production, hence decreasing the motive to produce. However, as Petrol and Diesel are inelastic goods, a majority of the said indirect taxes are imposed on the consumers and not the producers. As shown in Diagram 2, the consumer burden of tax is greater than that of a producer as price increases due to the irresponsiveness of demand to changes in price.
Another tax indirect tax that is useful is plastic bag tax. As this requires people to pay for the use of bags, it lowers the demand for new bags and encourages the demand to reuse bags. Also there’s road tax which people needs to pay otherwise people will not be able to own a car as it causes emissions of CO2 which pollutes the air. This also another Way of the government being able to get money and use it for government spending within the economy. However there are problems with taxation to get rid of the negative externalities.
It also works to prevent the practices of unfair pricing and charging higher prices to consumers while the companies produce less product, limiting choices for consumers. It also regulates
We send so much money to keep it at bay,but yet most of the people who are locked is because of small crimes that include marijuana offenses. If you ask me it seems as if the government is up to something or this is all part of an elaborate plan. The government if they want to could regulate the drug and benefit the economy. “If we substitute a tax on marijuana cigarettes equal to the difference between the local production cost and the street price people currently pay--that is, transfer the revenue from the current producers and marketers (many of whom work with organized crime) to the government, leaving all other marketing and transportation issues aside we would have revenue of (say) $7 per [unit]. If you could collect on every cigarette and ignore the transportation, marketing, and advertising costs, this comes to over $2 billion on Canadian sales and substantially more from an export tax, and you fore-go the costs of enforcement and deploy your
Figures on the cash flow forecast at this point will look very poor. Therefore it is important for the company to make sure that they are making enough money from the products that they are selling and haven’t under-priced them if they have used expensive materials. If the materials are too expensive then they must make sure that they have looked into buying cheaper material as long as this doesn’t affect the quality of the product that they are selling or this may also affect how well the product sells. Expenditure Changing the company’s expenditure will have an effect on the profit or loss it makes. If there is a large increase in some of the figures of the expenditure, it could mean that there would be either a large decrease in the profits made by the company or that the company’s loss figure has increased suddenly.
I believe whole-heartedly that government intervention as well as taxation should be justified when these industries are not providing optimal amount of a good for society’s well-being. When a tax is put on someone’s favorite soda, they are either going to buy a similar drink that is untaxed or not buy the drink at all. Typically, the body does not account for liquid calories as much as it does food calories, therefore making it easier to drink more sugared drinks. Usually people do not to feel full from a sugary drink, which makes it less likely to buy foods that will replace the taxed beverage. They would be more likely to drink one or two more cans of soda rather than eating a snack or a full meal.
And how? The moment there is speculation that crude will be trading higher, retailers usually increase their prices in an attempt to keep their margins intact for future purchases. Contrarily, when the price of the crude decreases, retailers are not inclined to lower rates as fast as they have raised it in order to maximize profits.” (Austin, 2011) So you can say when the price of oil is rising, the merchants have a small opportunity to gain a profit. Yet when the prices are low, they utilize this to take a advantage of the situation and delay the lowering of prices at the pump. It might be acceptable from their point of view for this reasoning.
When there is a greater disposable personal income this will allow consumption to increase due to the money saved from the lower tax rate. Through consumption increasing this will favour economic because the gross domestic product has increased. When government expenditures are increased it will have a multiplier effect on aggregate demand. Because of the multiplier effect, the government can increase spending by only a small amount to achieve a larger, necessary increase in aggregate demand. By doing so, the economy will be able to attain an equilibrium level of real
It’s like a toxic candy with poison inside but sweet sugar covering outside. Congress may not be able to predict the consequences, or it could have already recognized the negative outcomes but still chose to continue because the results sound good to people. Raising the minimum wage won’t be efficient unless it’s adjusted sufficiently and accordingly to the movement of market wages and inflation (even by doing so, there will be still a number of job losing but that’s unavoidable). Otherwise, nothing but the opportunity of teenagers –the future of the world- will be damaged. Works Cited Frisby, John.