The power plant aganda in economical point of view [Brian Lim, team B, 3rd blogging]

When does the government decide to built power plant in Riverside, they should consider economically about this agenda. First, the government may decide to gather the money which will be used for building the power plant by burdening tax on citizens. When we discussed this agenda in class, all of our classmates agreed with that 50% tax burden on citizens are too high. Economically, if the tax burden on citizens (=buyers), the demand curve will be downward in the market graph. This mean is that the quantity of demanded of using power plant energy will be decrease, because the tax will cause price increasing. Too much tax burden on citizens is not good opinion. Second, the government may decide to gather the money which will be used for building the power plant by burdening tax on company that will build power plant. Let’s think about this way carefully. Economically, if the tax burden on company (=sellers), the supply curve will be upward in the market graph. This mean is that the price of using power plant energy will be high. In additional, the price increasing of using power plant energy causes the decreasing quantity of demanded of using power plant energy. Eventually, the power plant will not work long time. So, in my opinion, the most important thing in this agenda is of finding the rational equilibrium about burdening tax on citizen and company in market. As we discussed in our class, 25% tax burden on citizen is rational. So, if the government needs to collect 50% tax for building the power plant, they should burden 25% tax on citizen and company, respectively. And the government should pay 50% subsidy for building power plant.