2/27 - i. Fl. Natural because inc cons ii. All OJ because...

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2/27/08 Suppose there are 2 orange juice factories in lake whales fl: A Florida’s Natural factory, and a 2 nd factory that produces orange juice for all major brands. Suppose the city is considering charging a tax on one of the 2 factories ($100/ truckload) and the two factories start out producing the same amount of OJ. Compare the effects of the tax if it is charged to each factory. Answer: First we see compare so we draw 2 panels. Then we recognize it is a breadth of the market problem and title our graphs FL. Natural and all OJ. It is always easier to walk away from one brand so FL natural is inelastic. Since the city is going to implement a tax, the supply curve shifts up, not left or right. Then we label our graph and draw conclusions. (C) Which factory should the factory tax if it cares more about the consumers? The factory owners? The employees? And in each case why?
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Unformatted text preview: i. Fl. Natural because inc cons ii. All OJ because inc prod iii. All OJ because which implies fewer lay offs (D) Which factory should the city tax if it does not care about its own revenue and why? All OJ because inc cons is non-local Suppose there are 2 employers in Milo, MN. A hospital specializing in organ transplants and Mr. R.D. Offutts potato farm. The city is considering a tax on 1 of these employers ($100/transplant, $100/ truckload of potatoes.) Compare the effect of this tax, if it is charged to each employer. Answer: First we see compare so we draw 2 panels. Then, we know that organ transplants is a special case where demand is perfectly inelastic and we are comparing it to one brand so the potatoes are perfectly elastic. The new tax causes the supply curve to shift up and now we label our graphs....
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This note was uploaded on 04/18/2008 for the course ECO 2023 taught by Professor O'gorman during the Spring '08 term at South Florida Community College.

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