Assessment 1 Portfolio 2: Two Mini Essays (2,000 words in total) Due: Week 7, Saturday 3rd June at 11:59pm This assessment requires two mini essays -­- 2,000 words in total (10% flexibility either...

Assessment 1
[Topic]
[Name of Student]
[Enrollment Number]
A:
The levy of taxes by the government on producers or consumers are most likely to be passed on
to the consumers as argued by some analyst. Consequently, the increase in price impacts the
demand of the products. “Because of this , leisure and business travelers are likely to respond
differently to changes in certain socioeconomic factors” Hooper (1993). We would analyze the
impact of this price change in the in case of Business travel and Leisure travel. Business travel
are generally insensitive to the price changes as compared to leisure travel which is considered
discretionary.
Before we move on to the cases, we need to understand the economic factors that are considered
y the consumers while making purchase decisions. These are the Utilities derived from the
products, preferences, Price Elasticity of Demand etc. utility gained from a particular goods or
services can be meaningfully measured according to Cardinal Utility theory. The Cartdinal
Utility theory of consumer demand was developed by classical economists, viz. Gossen (1854)
of Germany, William Stanley Jevons (1871) of England, Leon Walras (1874) of France.
NeoClassical economists, Alfred marshall (1890) made significant refinements in the Cardinal
Utility theory.
The notion of „Utility‟ is synonymous with pleasure, satisfaction and a sense of fulfillment of
desire. A person consumes a commodity because he or she derives pleasure out of it. In other
words, he derives utility from the consumption of the goods and services. All the goods that
people hold or consume possess utility.. utility can also be defined as the „want-satisfying power‟
of a commodity. But it is not absolute-but relative. It is relative to person‟s need. In other words,
whether a commodity utility depends on whether a person needs that commodity. All the persons
need not derive any utility from all the commodities. The utility derived by a person from a
commodity depends on his or her intensity of desire for that commodity; the greater the need, the
greater the utility.
People have many goals that cannot be fully accomplished. Because people face constraints or
limitations on their behavior, they must maneuver within those constraints. These constraints can
come in many forms and the taxes levied by the government are one of those. Income and
Wealth are other important constraints of which people are aware. Often our goals require other
people to act in certain ways. Lacking the ability to force them, one may try to persuade them, or
one may pay them. Exchange of this sort takes place if both the parties to the exchange find the
exchange beneficial, i.e.., it helps each side move towards its goal. Most people claim that their
money and income are not sufficient and that they need more, which means that they would like
to influence the actions of many more people than they in fact can. Economist call this
limitation- the budget constraints.
A choice involves deciding in favor of one option and discarding others. A budget constraints
limits the options from which people can choose. To make the best decision, a person must
choose the option that is both possible and that contributes most to the achievement of that
person‟s goals. Often it is impossible or difficult to list all the options and the budget constraints.
The marginal approach is the best approach taken. The marginal cost of a change is the change in
the costs caused by the change. The marginal benefit of the change is the change in benefits
caused by the change. The marginal approach suggests that one...