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Finance

Why is a tariff on a tennis ball not the best idea?

Elasticity Application
Here is your opportunity to earn 5 bonus points to be added to your exam. This assignment is designed to test your content knowledge as well as provide an opportunity to analyze a newspaper article. Reminder, newspaper article analysis is the main component of your video/infographic project.
Your answers should be submitted to a designated folder.
Why is a tariff on a tennis ball not the best idea? Elasticity. This is an opinion piece so our questions deal with bias as well. Note- this resource also shows how elasticity relates to tax burden.
https://www.washingtonpost.com/opinions/trumps-proposed-tennis-ball-tariff-represents-a-grand-slam-of-terrible-trade-policy/2019/06/27/75c08518-98df-11e9-916d-9c61607d8190_story.html?__s=flyjntfqnmdhy2fcyjtc&utm_campaign=MRUEmail&utm_content=trumps-proposed-tennis-ball-tariff-represents-a-grand-slam-of-terrible-trade-policy&utm_medium=News&utm_source=EX
1. Is the title of the article a fact or opinion?
2. The following questions contain excerpts from this article.
“…tennis ball buyers tend to be very sensitive to small changes in price, and they don’t have a lot of brand loyalty. If Ball A is 50 cents cheaper than Ball B, most customers will buy Ball A.”
What does this imply about the price elasticity of demand for tennis balls? Draw a graph to support your answer.
3. According to a tennis ball manufacturer in the article, “Given the thin margin on balls, the company could not eat the cost of the tariff or expect the retailer to do so; instead, the 25 percent tariff would be passed along to consumers.” So presumably higher prices for tennis balls.
Head, a tennis ball manufacturer, moved their production to China a decade ago. President Trump announced plans to impose a 25% tariff on Chinese imports, including the tennis ball. Head’s main competitors produce in Thailand and the Philippines. Use supply and demand graphs to demonstrate what will happen to the market for Head’s competitors as a result of the tariff.
4. Given the title of the article and your assessment of the economics as it applies to the content, what would you change about the article’s tone? Explain your answer.