Cookbooks are products that are thought to create health problems to many people. As a result, the government has resulted in taxing the product as a way of reducing the consumption of the cookbooks. This type of tax is called sin tax. It is a tax that is usually imposed on products that are thought to be harmful to the people. Similar tax is levied on cigarettes and alcohol. When sin tax is levied, the supply of the cookbooks reduces. This is because the price increases hence the demand reduces because the consumers shift to other similar products. Therefore the producers are forced to reduce their production hence reducing supply. The price of the cookbooks usually increases when a sin tax is levied. Sin tax increases the production costs of the cookbooks. As a result, these costs are passed to the consumers in form of high price. The sin tax I usually imposed on the producers. The tax leads to an increase in the production costs of the manufacturers. These costs are then passed to the consumers in form of high prices. Generally, the final payer of the sin taxes is the consumers since they buy the cookbooks at a higher price.
Sin tax is a good way of raising revenue to finance healthcare services. This is because those who consume the cookbooks pay the revenue. These same consumers of the cookbooks are the ones who have higher chances of getting health problems and hence go for treatment. In this regard, the people who get healthcare services are the ones who have financed it. Therefore the burden in the society of paying for healthcare services that can be avoided is eliminated. Therefore it is a good method of financing health care. However, it might not be fair since both poor and rich pay for the same amount of tax. Therefore the economic objective of income redistribution is not considered in this case (Koontz, 2007).
The government can use various taxes to increase government revenue. The government can increase sales tax such that for any product sold, some additional tax is realized. Capital gains tax is another source of government revenue. Transfer tax can also be imposed to collect additional revenue. When property is being donated or transferred from one individual to another, some revenue can be collected from this activity as a source of government revenue. Generally, there are many ways through which the government can increase its revenue.
The company has been very successful in US and has decided to export cookbooks. This can be described in terms of comparative advantage. It means that the company is able to produce the cookbooks at a lower opportunity costs as compared to other companies in other countries. This is considering the fact that the company is not the only one that can access the resources of producing cookbooks. It is due to its economies that it is able to produce cookbooks at lower costs and hence it is able to export at a lower price and hence compete with other companies. It has no absolute advantage in producing cookbooks since there are other countries and companies with the same labor, technology and raw materials to produce cookbooks.
The organization is likely to face various issues as it becomes a multinational company. First, diversity will pose various challenges in the management. The organization will be dealing with employees and customers from different cultural backgrounds. The decision making process is likely to be difficult since the views of various people from different cultural backgrounds has to be considered. Second, maintaining a common organizational culture is difficult. Working as teams and ensuring unity in the work place is likely to be impossible. The organization needs employees from various countries and different cultural background. In this regard, maintaining a single organizational culture is impossible.
The organization will also face difficult in obtaining the appropriate human resource. An international corporation needs employees abroad. These positions need highly qualified employees with the necessary experience. These people are difficult to obtain considering the fact that there is a need to employ the local people as a way of maintaining good social relations. Therefore the recruitment process of the organization is likely to change due to operating abroad. The fourth issue is that the organization is likely to face theft of employees. Usually, well performing employees in multinational companies are likely to find better jobs with other organizations. In addition, the company may be forced to steal employees from other organization to ensure that there are qualified people to run overseas branches.
The marginal utility of consuming luxury goods usually reduce as more of the product is consumed. Usually, the marginal utility of consuming a second unit of luxury goods such as a vehicle is very low. In this regard, it can be seen that the marginal utility of consuming a third product is likely to be very low. The main reason why this is the case is that there is a great risk of consuming luxury good. The rich families usually fear economic shocks that can greatly affect their consumption pattern (Koontz, 2007). Since luxury products are very expensive, there is a great risk associated with their consumption. In this regard, the consumption of luxury products results to a lower marginal utility. In this case therefore, the marginal costs of consuming a third luxury vehicle are very low.
The article by Vedder and Galloway is mainly based on the fact that markets are usually rational and therefore make the best decisions in terms of wage rates, labor supply and labor demand. Therefore labor unions should not intervene in the market since they distort the existing equilibrium. The article argues that labor market is market like any other and therefore any interference is likely to cause disequilibrium.
According to the article, when the labor unions enter into the labor market, they usually increase the required wage rates arguing that the set wage rate is the most fair for the employees. However, the effects of this are that many people are now attracted to the jobs whose wages has been increased. In addition, the organizations are forced to lay off some workers as a way of lowering the costs of the firms (Koontz, 2007). This is because the marginal product of the laborers after the wage increase is less than before. Generally, the results of increasing wage rates by the labor unions are that the demand for laborers by the employers decrease and the supply of labor to the jobs increases. The results are high unemployment rates in the economy.
The high unemployment rates due to the activities of labor union can be explained in various ways. First, fixing a high wage attracts many workers to the labor market. The number of unemployed people increases. Secondly, the employers are forced to lay off some workers since increase in wages increases the costs of the organizations. Therefore the only way to lower the costs is by laying off workers. This is considering the fact that increase in wage rates as directed by labor unions is not accompanied by increased productivity of the employees (Vedder, 1993). Finally, when the costs of producing in America increase, some organizations find it worthy to produce in other countries. As a result, organizations relocate to other countries where they can access cheap labor and as a consequence, many employees in America lose their jobs hence increasing unemployment.
The deadweight loss resulting from the activities of the labor unions is due to the fact that the economy and the employees both fail to benefit from the activities of the union. When the union raises wages in the area it controls, laborers shift to areas not controlled by the union and where the wages have not been increased because this is where they can get jobs. As a result, workers receive low wage rates due to the high supply of labor in this sector. On the other hand, the output in the general economy reduces due to the fact that reduced employment in the economy means declined national output (Vedder, 1993). Generally, dead weight loss results due to low wages or unemployment of workers and the reduced output of the economy.
Labor unions lead to inelastic of demand of the employees and high elastic supply of workers. This is because the employers can easily replace a worker due to the huge supply of the laborers. On the other hand, the demand for labor is inelastic considering the fact that the employers are not willing to employ additional workers due to high costs associated with it.
The results of labor union on population are that it leads to high population since it attracts immigration. People migrate to a country where the jobs are well paying. However, the population that migrates in such a country is the old aged people. These are the people who are very qualified but retire after a short period of time. Therefore the aging population in the country and the population in general increase due to activities of labor unions.
Increasing wager rates means that the marginal costs of producing an additional product is very high since it requires additional labor that is very expensive. The marginal revenue of organizations reduces due to the fact that that increasing wages doe not results in higher marginal productivity of the workers. Therefore marginal revenue of organizations falls due to activities of labor unions (Vedder, 1993). The fact that the general prices in the economy increase with increased wages, demand reduces hence profits of organizations reduce. Furthermore increased wages increase costs of organizations hence profits reduce.
However, labor unions are advantageous in some cases. The unions ensure that employees are not exploited by paying them lower wages than their marginal productivity. In addition, the labor unions reduce the differences in the income of individuals and states. The unions sure that people are paid wages have no much difference (Vedder, 1993). They also ensure that similar wages are paid in different states. As a result, the labor unions lead to convergence of income of individuals and states. Moral hazards apply to labor unions. This is because the presence of labor unions gives employees the courage to strike in search for their rights. The employees risk the costs of getting unemployed due to their strikes due to the fact that they are aware that the labor unions will ensure that their employment is not terminated.
References.
Vedder, R. K., & Galloway, L. E. (1993). Out of work: Unemployment and government in twentieth-century America. New York: Holmes & Meier.
Koontz, H., & Weihrich, H. (2007). Essentials of management: An international perspective. New Delhi: Tata McGraw-Hill.
