This assignment has two parts. For part one you will work with a simulation. For part two you will answer two questions (with an calculus option).

Part one

1. Play the Tax Game available online at

http://econ.glendale.edu/index.php (Links to an external site.)

It is a simulation in which you are the tax dictator for a mythical country. You mustcollect enough revenuebut not too muchfor your government by adjusting a numberof different tax rates, caps and deductions. When you collected sufficient revenue, thegame will tell you the tax incidence. That is the impact of your tax choices on differentincome groups ranging from the bottom 20% to the top 1%. The game also will report the Gini Coefficient.

See the reading on Canvas about taxes and the Gini coefficient

You will be asked to readjust you tax choices so that you are satisfied with your taxincidence. There is no correct answer to the game; each of you will differ in your politicalperspective and how you choose your tax rates. However, I will ask you to justify each ofyour tax choices as well as the overall tax incidence.

Foreachof the taxes, explain the choice you made for the tax rates. How did it affect your desire for a progressive or regressive tax incident. When relevant refer to the price elasticities that may have influenced your choice.

Part two

A.Think of a good or service with which you are familiar and for which there has been a recent change in quantity demanded because of a change (up or down) in price.What is the good or service?

What is your best estimate of the original quantity demanded? New quantity demanded? (please explain your units carefully.) You don't need to do research: these numbers can be a best "guess."

What is your best estimate of the original price? New price? (please explain your units carefully.)

What is price elasticity of demand for this good or service? Please show your work.How does this elasticity compare with others listed in the textbook?

B.Choose a concept you learned in this section of the course that changed your thinking in an important manner. Then write a short essay (about three paragraphs or one page) beginning with one of the following prompts:

"Although most people believe.....in fact...."

or

"Although I believed ..... in fact"

In your essay explain why you or most people hold the faulty belief. That is what is logical about it--even if it is faulty. Then explain what is a better view. Finally, explain why this difference matters. For this last step it may be helpful to use an example that shows why holding the incorrect belief causes an important result.