For the government in imposing indirect taxes it must consider price elasticity of demand because the imposition of taxes increase the prices because it affect the supply of these products and if they are elastic the consumers will reduce their purchases more the price increases due to the tax imposition and there fore less tax will be paid if the price elasticity of demand is inelastic. That is the government must not impose taxes on elastic goods because they may not be able to collect sufficient taxes compared to if they impose taxes on inelastic goods. For example governments impose taxes on alcohol and demand, which is dependent on habits than on price and the demand is inelastic rather than elastic. As well, if they are a monopoly supplier of any business services like rail or transport tolls they can charge higher prices in peak periods and low prices on off peak periods because the price elasticity of demand is inelastic in peak periods compared to off peak periods. That is they can use the price discrimination strategy to maximise revenue.
In addition as explained above if the market is monopolistic in nature they may introduce more competition and regulation of prices to protect customers from price maintenance practices and anti competitive practices by these monopolies so that the market becomes become more competitive and there fore the demand becomes elastic than inelastic.
This case of Les manufacturers offering Mary and James to become wholesalers for the sale of their new office equipment for commission is governed by the rules of offer and acceptance and particularly relating to postal acceptance of offer.
An agreement becomes a contract if there is availed offer and there is unconditional acceptance and in general the acceptance in communicated to the person offering to make an agreement.
In this case Les has offered by sending a letter to Mary to accept his offer to become a wholesaler of his new office equipment and he has implied that if he does not hear from her that he assumes she accepts her offer. There fore the communication is irrelevant in this case because the courts will imply from the letter that communication of acceptance is vital for the formation of a contract but the implied terms of the letter indicates the communication is not necessary in this case. In addition, applying the rules of acceptance for postal acceptance the acceptance happens when the acceptance letter is posted not received by the other party or the person offering. There fore in this case there is a valied offer and also a valied acceptance and there fore a binding contract has been established. In this context, Les
manufacturers have legal obligation under the contract common law as they may be facing damages if they breach the contract if Mary file action that there is binding contract and less has breached the contract and can sue for damages or the court under certain circumstances can order specific performance to honour the contract.
In relation to James Les did not offer him the opportunity to e his wholesaler. There fore there is no offer. Les cannot argue legally on the basis that he has discussed with James as a wholesaler and according to offer and he was willing to act given the opportunity. This is because the offer in general is not an offer and it must be specific. According to the rules of offer. There fore the acceptance of James to Les is null and void as there is no offer in the first place. There fore in accordance with the rules of offer and acceptance there is no contract. There fore neither party has any rights or obligation, as the contract is null and void. In this context Mary can file an action for injunction to stop the contract if the contract is not executed.
As discussed above of this case Mary has some legal rights arising from a binding contract and Les and James do not have any rights arising from a contract because at common law they do not have any legal rights or obligation because there is no contract because there is no offer by Les and there fore no acceptance by James.
