User Account

All Pages

Who will pay the the larger share of the tariff your firm

Assignment Help Business Economics
Reference no: EM132384097

The Tariff, the Price Elasticity of Demand and the Impact on Company Profits

In this week's discussion your are going to be the CEO of a company. In anticipation of the upcoming quarterly disclosure of profits, you prepare your Board of Directors for the challenge that US Tariffs on Chinese Imports is having on profits. Please make yourself CEO of only one of these hypothetical companies.

'Tis the Season- 'Tis the season is one of the largest importers of holiday decorations and the summer quarter is devoted to importing decorations such as lighting, artificial trees, table runners, outdoor yard decorations all of which have to be ready to ship by early fall. In fact we at 'Tis the Season has a highly inelastic supply curve, they ramp up to produce decorations for each season and then once that season has been shipped they move on to the next season. Fortunately the price elasticity of demand for almost all of your products is 0.19.

We Build Big - We Build Big is one of the largest developers of residential structure in the US. We Build Big, builds every thing from apartment complexes to new single family homes. Critical materials such as lumber, gypsum board, fabricate metal etc are largely imported. We Build Big know that our production process, the supply curve, is relatively inelastic. The concern over profits is that the price elasticity of demand for housing is 1.0.

Very Big US Auto - Very Big US Auto is one of the oldest and one of the largest auto manufacturers of auto in the US. Very Big US Auto's supply chain is highly dependent components manufactured in China and assembled in the US. Very Big US Auto knows that the price elasticity of supply is relatively inelastic and that then the price elasticity of demand which is1.2.

Now explain:

Is the demand curve for your product relatively elastic, inelastic or unitary elastic? Demonstrate for your company's product, by how much the quantity demanded will change if you pass on the 25% increase in cost from the tariff as a price increase for your product. In other words, show your calculation of the percentage change in the quantity demanded given a 25% change in the price.

Given your company's price elasticity of supply and price elasticity of damand prepare a statement for your board as to the potential impact of profits. Who will pay the the larger share of the tariff, your firm or your customers.

Reference no: EM132384097

Questions Cloud

What must? lisa annual deposit? be : Lisa Simpson wants to have ?$1,500,000 in 60 years by making equal annual? end-of-the-year deposits into a? tax-deferred account paying 10.50 percent annually.
Difference in an economy of scale and an economy of scope : What are they? What is the key difference between an economy of scale and an economy of scope? Sirius XM acquires Pandora;
Before-tax cost of debt and after-tax cost of debt : Before-tax cost of debt and after-tax cost of debt David Abbot is buying a new house, and he is taking out a 30-year mortgage.
Number of examples of emerging technologies : You have seen a number of examples of emerging technologies that impact the way in which public safety professionals of the future perform their jobs.
Who will pay the the larger share of the tariff your firm : Prepare a statement for your board as to the potential impact of profits. Who will pay the the larger share of the tariff, your firm or your customers.
What will the stock price per share be after the stock : What will the stock price per share be after the stock repurchase is completed?
Allegations of children crying and screaming : A city social services agency is reportedly looking into allegations of children crying and screaming at the Happy Days Day Care Center at 1456 Marblehead Way.
What is the firm unlevered cost of equity capital : The corporate tax rate is 30 percent. What is the firm's unlevered cost of equity capital?
Why did you find these topics interesting : Explain the importance of understanding the TWO most interesting aspects of our reading material. Why did you find these topics interesting.

Reviews

Write a Review

Business Economics Questions & Answers

  Elucidate distortions do you think would appear

What assumptions do you make answering this question. Elucidate distortions do you think would appear in the economy if such a tax were introduced.

  Discuss the three methods of segmentation or tourists market

For what reasons might economists be interested in segmentation in tourism? Discuss the three methods of segmentation or the tourists' market.

  Risk neutral manager view different compensation packages

Assume the operations manager at the company you own prefers to put in low effort rather than high effort. In order the manager to exert high effort, his expected financial gain must be at least $60,000 higher than if he puts in low effort. How would..

  Describe the harrod-domar growth model

Describe the Harrod-Domar growth model, and explain precisely how the model illustrates dynamic instability. Why is it often called the “knife’s edge model”?

  Running a trade deficit allows a country to consume more

Why might a U.S. trade deficit be preferable to a U.S. trade surplRunning a trade deficit allows a country to consume more than it produces. Americans acquire more foreign assets under a trade deficit than they do under a trade surplus. Under a trade..

  Discuss the relationship between diversity and ethics

Please graph the Business Case and discuss how the components are related to an effective diversity initiative in an organization. Also, please graph and discuss the relationship between diversity, ethics and organizational performance, as reflected ..

  Mylie total utility from singing the same song

Mylie's total utility from singing the same song over and over is as shown in the table below.

  How many additional gallons would they want to purchased

if la jolla could obtain additional of the white wine, should they do so. if so how much should they be willing to pay for each additional gallon and how many additional gallons would they want to purchased

  Productivity of resources

Your author claims that the U.S. economy can increase its real output (grow) by:(1) increasing its inputs of resources and (2) by increasing the productivity.

  Suppose the cost of the market basket

Treat the country listed as the home country, and treat the United States as the foreign country. Suppose the cost of the market basket in the United States is P(US)=$190. create a table similar to the one shown and fill in the blank cells.

  Female patrons a lower price for a drink than male patrons

A bar offers female patrons a lower price for a drink than male patrons. The bar will maximize profits by selling a total of 200 drinks (a night). At the current prices, male customers buy 150 drinks, while female customers buy 50 drinks. At this all..

  What will the new level of consumption be from then on

Assume that a country produces an output Q of 50 every year. The world interest rate is 10%. Consumption C is 50 every year, and I = G = 0. There is an unexpected drop in output in year 0, so output falls to 39 and is then expected to return to 50 in..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd