This week, reflect on how businesses and consumers interact under the influence of taxation. Using ideas from Chapter 5 and Chapter 6:
Explain how taxes affect a business’s decisions about pricing and production. Give a real example of a good or service that might be affected by a new tax.
Connect the concept of consumer choice to taxation. How do taxes on certain goods change the choices consumers make? Refer to the ideas of utility and marginal utility in your explanation.
Apply these ideas to your own life: Think of a time when a tax or price increase made you choose differently as a consumer. What alternative did you choose instead? Did you feel that your total satisfaction (utility) increased or decreased? Why?