EC261 Case Study #4

Assignment Description:
Class time is often dedicated to analyzing case studies in a group setting. Students should come to class having already individually analyzed the case and its associated rubric(s). Students should use class time to collaborate with other classmates and gather further peer insight in a group setting. To be clear, collaboration does not mean “copying”, but rather sharing insight, assisting, discussing, equitably working together, and more. Remember that a strong emphasis in the grading process is placed on your portrayal of your critical thinking in the submission of the case study report. It is important to arrive at the proper calculations, though it is very possible that classmates may arrive at different “correct” calculations dependent upon individual mathematical or contextual assumptions/choices. Be sure to state all assumptions made and cite every source used. Students must individually submit their case study reports. The case study reports should consist of the following components:
• Responses to the posed questions within the case.
• A summary of the microeconomic issues within the case and how firms, individuals, etc. would be affected by the situation.
• An overall conclusion of your findings comprehensively detailing proposed solutions to the above microeconomic issues.
• All references (be sure to cite in-text also).

 If you find this symbol, a response is needed.
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EC 261 Microeconomics Case Study 4- HAHA! Curve and Garage Doors
You think it is a good idea to start a business in Winona, MN, specializing in the installation of residential garage doors. Based upon current estimates, you have calculated that Don’s Doors has about 65% of the market share in Winona. The remaining market share mostly consists of companies from La Crosse, WI and Rochester, MN. You currently plan to only install residential garage doors that fit a 1 or 2 stall garage door. Assume that Don’s Doors charges approximately $1,700.00 for 1-stall and $2,300.00 for a 2-stall for a “standard job” that includes a non-insulated garage door, new automatic door openers, a keypad entry system, the overhead mechanical system, the light sensors, and all the electrical work associated with the installation. Also assume that Don’s Doors charges a 30% markup on any products, they use from their suppliers, and the remaining charges to their consumer are for their “time” which is typically charged at approximately $125 per hour.
 Describe the typical comprehensive services that you would need to be perform in order to install any given garage door.
 Calculate the yearly demand in Winona for new “1-stall” residential garage doors.
 Calculate the yearly demand in Winona for new “2-stall” residential garage doors.
 Create your strategic yearly supply schedule in Winona for new “1-stall” residential garage doors.
 Create your strategic yearly supply schedule in Winona for new “2-stall” residential garage doors.
 Calculate the elasticity of demand for new “1-stall” residential garage doors in Winona.
 Calculate the elasticity of demand for new “2-stall” residential garage doors in Winona.
 Calculate the elasticity of supply for new “1-stall” residential garage doors in Winona.
 Calculate the elasticity of supply for new “2-stall” residential garage doors in Winona.

Assume that after 1 year of being in business, in an effort to raise revenue, minimize importation, and incentivize USA made products, the US government imposed a new 12.5% sales tax on vinyl (polyethylene) sold in the USA borders.
 What other industries would this tax impact and how would it impact them?
 Discuss the likely implications of a tax of this magnitude.
 Calculate deadweight loss that occurs because of the tax.
 Calculate deadweight loss if the tax would have been at 5%, 15%, and 20%
 Develop a Laffer Curve that represents the relationship between the size of the tax and the generated revenue from the tax.
 What do you predict would be the optimal tax level?
 Discuss the alternative solutions that you might have to consider as a business owner?
 Discuss the likely impact that the new sales tax will have on consumer behavior in Winona, MN.
 Based upon your proposed solutions and your anticipated consumer behavior predictions, how then might the government then respond via regulations? What issues might arise from those regulations and how would you and consumers then respond?

 A summary of the microeconomic issues within the case and how firms, individuals, etc. would be affected by the situation.

 An overall conclusion of your findings comprehensively detailing proposed solutions to the above microeconomic issues.