Question

1. In your opinion, if the government imposes unit sales tax (i.e. $ tax per unit sold) on a product, which one, demand or supply will shift? Increase or decrease? Will the new tax cause “disequilibrium”? Please state clearly about the shift (leftward or rightward) and the equilibrium price and quantity change. No graph is required. use your own words.

2. If the gasoline price remains low and the high tariff on import car in both China and U.S., what will be the possible impact on the U.S. market price of Tesla Model X? Please explain your answer in the language of economics. A reference link to support your answer is a plus. use your own words.

Answer 1

ASWER:the government imposes unit sales tax (i.e. $ tax per unit sold) on a product then demand for product will shift as we know demand for product is inversely proportional to its price.Shift in demand curve will be in Leftward direction i.e. by increasing tax price of the product will decrease hence the quantity demanded for each price will decrease as well.This will definitely change the equilibrium price for the product in the market.

ANSWER 2: If the gasoline price remains low and the high tariff on import car in both China and U.S.,then the possible impact on the U.S. market price of Tesla Model X - As this is the company of USA and manufacture cars in USA then here tariffs on imported cars has been increased then market price for car in USA will not be effected but cars price when export to China will be effected as it now be costlier for consumers,and as we know demand is linked with price in inverse relation hence with increased prices demand for car will decrease.

As due to recent trade wars between China and USA,as a retaliatory action China increased tariffs on Tesla cars of 25% additional tariff hence it was in news that Tesla will now cost $20,000 more in China.