Business free essay sample

Now suppose the government imposes a per unit sales tax of 20 pence per kilogram in the butter market. What are the implications for the market equilibrium price and quantity? [Tutors: Please start by drawing a diagram to show the impact of the tax and the compute the new equilibrium. The post-tax price paid by consumers is computed by recognising that the consumer and producer prices are different. We can thus restate the demand and supply functions for butter as: Qd = 20 – 0. 05Pc Qs = – 10 + 0. 20Ps , where Ps is the price suppliers receive and Pc is the price paid by consumers. The tax drives a wedge between the price consumers pay and the price suppliers receive, such that t = Pc – Ps. If we substitute Ps = Pc t into the supply equation we obtain: Qs = – 10 + 0. 20(Pc t) , If we set demand equal to supply we have: 20 – 0. 05Pc = -10 + 0. 2(Pc – t) Hence: Pc = (30 + 0. 20? 20)/0. 25 = 136. Thus, the post-tax price is ? 1. We will write a custom essay sample on Business or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page 36 per kilogram. Substituting the price into demand (it could also have been substituted into the supply function), we can compute the post-tax equilibrium quantity: Qd = 20 – 0. 05? 136 = 13. 2 thousand kilograms of butter per day. The price received by suppliers is given by Ps = Pc – t = 136 – 20 = 116. (b) Who incurs the greater burden of the tax – consumers or producers? We know that the pre-tax price was ? 1. 20. After the tax, the consumer pays 16 pence more and the supplier receives 4 pence less. The consumer burdens 80% of the tax and the producer only 20%. (c) Compute and interpret the deadweight loss of taxation in this market. (Note: the deadweight loss is also known as the excess burden) The upper triangle is [1. 36 – 1. 20]? 0. 5? [14-13. 2] = ? 0. 064 thousand or ? 64 per day. The lower triangle is [1. 20 – 1. 16]? 0. 5? [14-13. 2] = ? 0. 016 thousand or ? 16 per day. The overall tax take per day is 0. 2? 13. 2 = ? 2. 64 thousand or ? 2640 per day. The deadweight losses or the excess burden of taxation represents only ? 80 per day or 3% of the tax revenue. The small excess burden of taxation in this case is due to the inelastic demand for butter and its corresponding inelastic supply. 2. An economics lecturer is considering leaving the University of Sussex and opening a consultancy business. For his services as a consultant he would be paid ? 5,000 per annum. To establish the business the lecturer must convert into an office a house he currently owns and from which he collects rents of ? 1000 per month. He must hire a secretary at a salary of ? 20,000 per year and must withdraw ? 10,000 from his 10% per annum fixed rate savings account to use for miscellaneous expenses. The University of Sussex pays the economics lecturer ? 35,000 per year. On the basis of a purely economic analysis, do you predict that the economics lecturer will leave the University to start up his own business? In other words output continues to rise but at a diminishing rate. Remember that output initially increases at an increasing rate, then increases at a decreasing rate, then may decrease. In the first phase the MP is rising but when more of the variable input is added to the fixed factor the rate of increase in output starts to fall and this is where the MP starts to fall and the law of diminishing returns sets in. If output actually declines as more of the variable input is added to the fixed factor, the MP must be negative. b) Property taxes, building insurance payments and depreciation of plant and equipment are fixed costs. True. These are all costs that do not vary with output and so are fixed costs. (c) The opportunity cost refers to the cost that a firm incurs to retain the use of the input for the firm. True. These are the implicit costs a firm incurs to retain its inputs. (d) If long-run total costs rise faster than output then we have the case of increasing returns to scale. False. If total costs are rising faster than output it must mean that average costs are rising. This is not the case of increasing returns to scale (or economies of scale) but of decreasing returns to scale (or diseconomies of scale). (e) Diminishing returns and decreasing returns to scale are different ways of saying the same thing. False. This is a common fallacy. There is no direct relationship between the concept of diminishing returns and the concept of returns to scale. The former (diminishing returns) represents a short-run concept where certain factors are held fixed and the latter (decreasing returns to scale) represents a long-run concept where all inputs are allowed to vary. If marginal cost is above the average cost, the average cost must be falling. False if MC is above AC, then AC must be rising. If the marginal cost is above the average cost then each additional unit produced is adding a cost to the firm that is above the average. If you add a number to the average that is greater than the average, the average must rise. For instance, the average of the following sequence 2,4,6 is 4. If we add 8 to this sequence, the marginal number, and take the average we obtain 5. Conversely, if we add 2 to this sequence we get an average of 3. 5. Business free essay sample The Woodson Foundation, a large nonprofit social service agency is teaming up with the public school system in Washington D. C. to improve student outcomes. There’s ample room for improvement. The schools have problems with truancy, low student performance, and crime. New staff quickly burn out as their initial enthusiasm for helping students is blunted by the harsh realities they encounter in the classroom. Turnover among new teachers is very high, and many of the best and brightest are the most likely to leave for schools that aren’t as troubled. The Stags of Group Development for the Woodsom foundation in building a cohesive coalition The First Stage is bringing the new plan in development is forming an executive development committee or team with the help of Human Resource to choose the right candidates for the jobs. The Second Stage will be Storming which gives conflict towards each and individual group and creates doubts also each group have its own interests and some cases they can directly opposed to one another. We will write a custom essay sample on Business or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page For this stage they have to be work as a team and leave all the intensive and doubtful behavior outside of the team. Then only this stage work The Third Stage will be Norming in this for the achieving the certain purpose the goals have set up to start the performance and the team has learn how to set aside your doubts and how to learn work productively together. Who will do what work and how it will be accomplished The Final but not the least is Performing this stage will give us the satisfaction when the actual team work together to achieving the goal set up by the organization, and all the productivity have been shows and achieved. The Group has stuck in the stages of Forming and Storming as they were not able to get over their own thought and was not able to fully synchronize to achieving the given goal to them. Identifying the Problems in Woodsom Foundation