DBA 8020 Module 5 Tax Policy, Supply and Demand Example

Course	DBA-8020 Seminar in Economics and Finance Models and Matrices of Sustainability
Module	Module 5
Paper type	Module 5 written assignment: tax policy and its effect on supply and demand
Length	About 517 words, 4 pages
Format	APA 7 student paper
School	Thomas Edison State University
Program	Doctor of Business Administration
Updated	October 2026

Free sample paper for DBA 8020 Module 5

Two Thirds on the Shopper: Incidence of a Plastic Bottle Fee and What It Means for Refills

Student Name

Doctor of Business Administration, Thomas Edison State University

DBA-8020: Seminar in Economics and Finance: Models and Matrices of Sustainability

Mentor Name

Month Day, Year

What this page is doingThe title states the incidence result, that consumers bear most of the fee because demand is less elastic than supply.

Two Thirds on the Shopper: Incidence of a Plastic Bottle Fee and What It Means for Refills

The Proposal

A bill in our state would charge 20 cents on each single-use plastic bottle of household cleaner sold, collected from manufacturers, to fund recycling programs. Our refill concentrates, sold in reusable bottles with small refill pouches, would be exempt.

How a Tax Shifts the Market

Saros (2020) shows that a per-unit tax collected from sellers shifts the supply curve up by the amount of the tax: sellers need 20 cents more per bottle to supply the same quantity. The new equilibrium has a higher price paid by buyers, a lower price kept by sellers and a smaller quantity traded.

Who Bears the Fee

Fullerton and Metcalf (2002) emphasize that the statutory burden, who writes the check, says little about the economic burden, which depends on how responsive buyers and sellers are. The share borne by consumers equals the elasticity of supply divided by the sum of the elasticities of supply and demand.

Shoppers would pay about 13 cents more per bottle; manufacturers would keep about 7 cents less.

Input	Estimate	Basis
Price elasticity of demand for spray cleaners	0.8 (absolute value)	Category is necessary; substitutes exist but are imperfect
Price elasticity of supply	1.6	Bottlers can shift capacity to other products
Consumer share	1.6 / (1.6 + 0.8) = 67 percent	About 13 cents per bottle
Producer share	0.8 / 2.4 = 33 percent	About 7 cents per bottle

What this page is doingComputing incidence from elasticities shows why charging the fee to manufacturers does not mean manufacturers pay it, the central point of tax incidence.

Effect on Quantity

At an average price of $4.50 a bottle, a 13-cent increase is about 2.9 percent. With demand elasticity of 0.8, quantity falls about 2.3 percent. In a state market of roughly 40 million bottles a year, that is about 920,000 fewer bottles, and the fee would raise about $7.8 million a year on the remaining sales.

Deadweight Loss

The deadweight loss is the value of the trades that no longer happen. Approximated as half the fee times the fall in quantity, it is about 0.5 x $0.20 x 920,000, or roughly $92,000 a year. In standard analysis this is a cost of the tax. But if each plastic bottle imposes an external cost through waste and litter, the reduction in bottles is partly the point, as Pigou (1920) argued for taxes on activities that impose costs on others; Module 6 takes up that argument.

What the Fee Means for Our Product

Our refills are exempt, so the fee raises the price of our main substitute by about 13 cents a bottle. For a household using two bottles a month, that is about 26 cents, small but enough, combined with the behavioral nudges of Module 1, to tip some marginal buyers. More important, the fee signals the direction of policy: other states are considering similar fees, and our product is positioned to benefit.

Conclusion

A 20-cent fee on plastic cleaner bottles would fall mostly on shoppers because demand is less elastic than supply. It would reduce bottle sales modestly, raise revenue for recycling and create a small deadweight loss, while giving refill products a modest price advantage.

References

Fullerton, D., & Metcalf, G. E. (2002). Tax incidence. In A. J. Auerbach & M. Feldstein (Eds.), Handbook of public economics (Vol. 4, pp. 1787-1872). Elsevier. https://doi.org/10.1016/S1573-4420(02)80005-2

Pigou, A. C. (1920). The economics of welfare. Macmillan.

Saros, D. E. (2020). Principles of political economy: A pluralistic approach to economic theory (3rd ed.). Valparaiso University.

DBA 8020 Module 5 instructions, in plain terms

This written assignment covers tax policy and its effect on supply and demand. Expect to show how a tax shifts a market, determine who bears it using elasticities, estimate effects on price, quantity and revenue, and discuss deadweight loss. Apply the analysis to a real or proposed tax that affects an organization you know, show your calculations and explain each step with theory from the textbook and assigned research. State and justify the elasticities you use, and estimate the effects on quantity, revenue and deadweight loss with the steps shown. Use a table so each step of the incidence calculation can be followed. Apply the analysis to a real or proposed tax. State your elasticity sources.

How this DBA 8020 Module 5 example is built

The paper describes a proposed fee and explains how it shifts supply. A section applies research on tax incidence, and a table computes consumer and producer shares from elasticities. Sections estimate the fall in quantity, the revenue raised and the deadweight loss, noting the external cost the fee targets. A section explains what the fee means for refills, and the conclusion summarizes. The quantity section estimates bottles no longer sold and the revenue raised, and the deadweight loss is computed and then reinterpreted in light of the externality the fee targets. A table derives each side's share of the fee from the elasticities. The conclusion summarizes the fee's effects on shoppers, producers and refills. The fee's effect on refill demand is estimated for a typical household.

Reading the DBA 8020 Module 5 grading rubric

Credit goes to correct incidence analysis, accurate calculations, sound use of theory and research, and application to a real decision. Papers that separate statutory from economic incidence show command of the concept. Estimating deadweight loss and noting the externality it may correct demonstrates depth. Linking the analysis to a firm's strategy shows practical relevance. Reinterpreting deadweight loss when a tax corrects an externality shows a sophisticated grasp of welfare economics. Showing every step lets the reader check the incidence result. Linking the incidence result to the firm's strategy shows practical value beyond the calculation.

DBA 8020 Module 5 help from the desk

Students lose points by assuming whoever pays the tax bears it, by using elasticities without stating their basis or by computing deadweight loss without explaining it. Others ignore externalities. State and justify your elasticities. Compute each party's share. Estimate quantity and revenue effects. Explain what the deadweight loss means. Explain what your elasticity estimates rest on, and test how the result changes if they are wrong. Distinguish who pays a tax to the state from who bears it in the market. Show how the fee changes demand for substitutes. A free first sample on your own DBA-8020 tax policy assignment is available on request. Show who bears the fee using the two elasticities, and state the share each side carries in cents.

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DBA 8020 Module 5 questions, answered

Where can I find a free DBA 8020 Module 5 sample paper?

The incidence of a fee on plastic cleaner bottles is analyzed in the assignment above.

Who bears the burden of a tax?

The side of the market that is less responsive to price bears more, regardless of who pays the tax to the government.

How is the consumer share of a tax calculated?

Elasticity of supply divided by the sum of the elasticities of supply and demand.

What is deadweight loss?

The value of trades that no longer occur because a tax drives a wedge between what buyers pay and sellers receive.

Can a tax improve efficiency?

Yes, when it corrects an external cost, such as pollution, that the market does not price.

DBA 8020 Module 5 Written Assignment: Who Pays a Plastic Packaging Fee? Example