Microeconomics-Chapter Questions





Microeconomics-Chapter Questions

Question 1

Gasoline is heavily taxed because it is a non-renewable source of energy. Since its production is not guaranteed for many generations to come such as solar power, it is highly priced in order to regulate its consumption (Harvey 17). Furthermore, its necessity in people’s daily lives makes its taxation lucrative. Similarly, cigarette manufacturers pay costly taxes to governments due to the inelasticity of the product. This means that any change in its price does not affect its utilization. However, the government should not tax junk food as eating is a basic need that is done according to the preferences of an individual. In fact, prescription drugs, fruits and vegetables are often exempt from sales tax because they are consumed by a majority of the population and are vital for the day-to-day survival of people.

Question 2

Despite Monday being the slowest day in the restaurant industry, most of them stay open because they would not want to disappoint the few customers that frequent their premises on this day. In particular, there are those that pride themselves in being 24 hr outlets and a closure on Monday would break that promise. This would in turn lead to the disgruntlement of patrons and even boycotts may follow. Likewise, most restaurants receive fresh food deliveries on Tuesday. Hence, it is prudent for them to remain open on Mondays in order to serve the remainder of the previous stock before the arrival of the new one. A lack of doing so would result in the business making losses on a regular basis. Furthermore, they do so in order to retain the competitiveness within the industry, as they are aware that other eateries such as shopping malls would be open and that would lead to a shift in customer loyalty (Granberg 8).

Works Cited

Granberg, James. Increasing Restaurant Sales: Boost Your Sales & Profits by Selling More Appetizers, Desserts, & Side Items. Ocala, Fla: Atlantic Pub. Group, 2003. Print.

Harvey, Leslie. Energy and the New Reality. London: Earthscan, 2010. Print.

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