the essay about the tax on Mexican Avocado
Some of the requirements for essay are already in the doc. What I need is an essay about the second topic.
2. ‘We will build a wall and make Mexico pay for it!’ was one of the promises of President Trump’s candidacy. One proposed policy to make this happen was to tax imports (called a tariff) from Mexico to raise funds to build the wall. Let us simplify this and say that the US imposes a tax on Avocados from Mexico (they are the worlds largest supplier of Avocados). Using a supply and demand model, analyze how this tax on Mexican Avocado producers will impact: the producer surplus of Mexican Avocado farmers and the Consumer Surplus of U.S. consumers. Discuss how this relates to who is actually paying for the wall. A complete answer will define and explain the role of elasticity in determining who bears the largest burden of the tax.
I hope this article can be used in some simple language so that I can understand it more clearly.
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Demand and Supply Model On Imports Taxation; A Case Study of US and Mexico
In a demand and supply model, taxes have an effect of reducing both the components; supply and demand (Azevedo & Leshno, 2016). They also drive the market equilibrium to a lower quantity and higher price than without the tax. This implies that if consumers have alternatives to a good or service with the new tax, they will tend to avoid the product due to its higher price. This explains the reason for low demand. On the other hand, if the producers are capable of switching to producing other goods, they will respond to the lower price of their commodities. Therefore, the burden of the tax will tend to fall to the market side with the least attractive alternatives hence the lower elasticity (Azevedo & Leshno, 2016).
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