You can use any business or firm you want. Part 1 For the particular firm/busi


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You can use any business or firm you want.
Part 1
For the particular firm/business you selected, explain how a tax or an increase of an already existing tax on the good the firm produces would affect the price and quantity sold of the product. Additionally, answer the following questions:
How might a firm change their decisions regarding the price or amount of the good to produce?
What would you expect the incidence of the tax to be?
Would it fall mostly on the buyers or seller?
Would you expect the number of sales to change significantly or not?
What would happen to the firm’s profit? Explain.
Part 2
Next consider a tax on an input your firm uses, in answering the next three questions:
What would happen to the price your firm needs to pay for that input?
Given the model of Supply and Demand from Chapter 4, what would happen to the supply of your firm’s product and what would happen to the price and quantity of sales?
Can you say anything about the firm’s profit in this case?

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