Data Analysis Assignment
Q1. Consider the stated goal of the tax policy described in State Cigarette Excise Taxes - United States, 2010-2011. Using a demand and supply diagram, determine whether that motivation will be satisfied if
- Demand is perfectly inelastic.
- Demand is perfectly elastic
Q2. Consider the stated goal of the price ceiling policy described in Venezuela weighs pet food price controls. Using a demand and supply diagram, determine whether that motivation will be satisfied if
- Demand is perfectly inelastic.
- Demand is perfectly elastic.
Q3. Consider the situation described in article: There is still a lot of drama surrounding the sriracha factory in California
To summarize: The production of Sriracha sauce (sometimes called "Rooster Sauce" based on the imagery on the bottle) creates a very strong chili pepper smell, disliked by vocal residents of the town of Irwindale, where the factory has been located in since 2010. Suppose that
qd = 1000 - ½MU
qs = 2MC - 20
And that the marginal negative externality the residents claim can be determined to be $250.
a) Calculate the CS, PS, GS and TS in the competitive equilibrium.
b) Calculate the CS, PS, GS and TS if the government reaches the socially optimal quantity using
i. A tax on sriracha production
ii. A quota on sriracha production
iii. A price ceiling on srirarcha
iv. A price floor on sriracha
c) The questions above assumed that the Sriracha factory created a negative externality. Suppose instead that "fresh-smelling-air" (air with no Sriracha chili smell) is a public good. Why are economists more likely to support government regulation if the population of Irwindale grew after the factory opened?
Attachment:- Assignment File.rar