1. Formulating Questions What questions should be asked about an excise tax or government supply regulation to determine its purpose?
The questions that should be asked about an excise tax or government supply regulation to determine its purpose; Is the government raising the tax to try to keep the people from buying the product? An excise tax is a tax increases production costs by adding an extra cost for each unit sold. Excise taxes are often played by the government thinking that some products are harmful for the consumer for the public good. Some examples of excise taxes are cigarettes,alcohol, and high pollutant gasoline. Government supply regulation is government intervention in a market that affects the price, quantity, or quality of a good. So, to answer the question, excise, and regulation directly affects supply by changing revenue production costs.
2. Making Comparisons What is the difference between a supply schedule and a market supply schedule?
The difference between a supply schedule and a market supply schedule is that supply schedules shows the relationship between price and quantity supplied for a specific good. Whereas, a market supply schedule shows the relationship between prices and the total quantity supplied by all firms in a particular market. The supply schedule is more broken down into a smaller schedule to show for one item such as tomato sauce, for a pizzeria. A market supply schedule shows the total for all firms, such as the total supply of pizza at a certain price in a large area. The quantity’s at pizzeria are much higher in a market supply schedule because the quantity’s are much higher.
3. Determining Relevance How is elasticity of supply related to elasticity of demand?
Elasticity of supply is related to elasticity of demand, because demand measures how consumers react to change in price, while elasticity of supply measures how firms will react to change in prices. Elasticity of demand responsiveness of buyers to changes in price, defined as the percentage change in the quantity demanded divided by the percentage change in price. Elasticity of supply responsiveness of output to changes in price; computed as the percentage change in the quantity supplied divided by the percentage change in the price.
4.Drawing Conclusions What causes supply to grow as price rises?
Supply grows as price rises because providers will often save their products while they are low, and sell them when the prices rises. Often, they will produce more products, so they can receive more revenue for their supply. The growth in supply provides consumers with more products, so that makes the provider receive more income because of the increase in price.
5. Expressing Problems Clearly Why doesn’t the supply increase when a new owner buys an existing facility that is producing a good, since there is a new supplier?
The supply doesn`t increase when a new owner buys an existing facility because, they are purchasing an existing facility that is already producing a good, there would be no increase in supply. For example, a hot dog stand sells 500 hot dogs every day, the previous owner decides to sell his business to another firm. There would be no supply increase because, of the set supply number by the previous owner.
6. Drawing Conclusions How do you think the invention of the airplane affected the supply of imported goods from other continents?
I think that the invention of the airplane affected the supply of the imported goods from other countries , by increasing the supply. The reason being is that shipment was faster, and people could order more quantity’s, in a short time frame. This increase in supply provided firms. an increase in revenue to produce the supply.
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