Question

Supply & Demand

For the following, examine the market for fashionable black wool vests in Billings. Assess the
impact of any change on the market clearing price and quantity as well as upon well-being/social
coordination/social cooperation. If you examine additional markets, make sure to clearly
distinguish which markets you are considering. Do not build on your answers from one question
to another.

Make it easy for me to follow your logical
argument (i.e. use graphs and equations whenever possible).

1. The legislation recently passed by congress comes into effect, significantly decreasing the
income tax.

Answer 1

Answer (1): ‘Income tax’, a term which we are all familiar with. This term, although may not be liked by many, comes with a sense of national and social responsibility. In the recent years, our nation has seen huge development in all the spheres. All this is possible due to the tax that we pay to the Government.

                                        However, income tax, at times falls quite heavily on our pockets, and we need constraint our budget to maintain out living standard. With the latest legislation which has decreased income tax by a huge margin with immediate effect, this a very welcoming move that has come to the rescue to the income tax payers. With the increased income, we can now adjust out budget constraint to adjust in those items too which we would have other wise ignored. With the reduction of income tax, the wool market has also received a huge boost with the prices of raw wool been reduced and has now been made available in the market a significantly lesser rate. This lesser rate has enabled us to purchase more of the product and thereby create more outputs with it. Thereby leading to an increase in productivity and improvement of our economic development.