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This 3 page Bundle was uploaded by Ashley Huffman on Friday February 6, 2015. The Bundle belongs to Econ 200 at University of Washington taught by Gregory Ellis in Winter2015. Since its upload, it has received 58 views. For similar materials see Introduction to Microeconomics in Economcs at University of Washington.
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Killer notes! I'm stoked I can finally just pay attention in class!!!
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Date Created: 02/06/15
Chapter 5 February 3 2015 Who Pays the TaX Example from 51 perunit tax of 020 P S 1 S 115 1 D 80 100 Qin millions Have to shift up the supply curve Consumers must pay most of the taX TaX Revenues 16 million 0 Taxes paid by I Consumers 1 15 100 X 80 12 million D Pay from the intercept of new supply curve to the original price I Sellers 1 00 095 X 80 4 million 0 The steepness of the slopes determine whether the sellers or the buyers pay more of the taX I The demand curve was steeper so the buyers will pay more of the taX and Vice versa Deadweight Loss to Taxation lost consumer amp seller surplus o Is the triangle in between the first supply curve and the second supply curve I Gap between marginal willingness to pay and marginal willingness to sell 0 12 115 095 100 80 2 million Example from pg 154155 Demand P100 4Q Supply P102Q Equilibrium o 100 4Q 102Q o 906Q o Q15 o P 40 per unit Consumer Surplus o 12 100 4015 0 450 Seller Surplus above supply curve below the given price 0 12 40 1015 0 225 Govt imposes per unit taX of 18 0 Supply curve shifts up by 18 but the taX doesn t change the slope Only the vertical intercept 0 New equilibrium I 100 4Q282Q I 726Q I Q12 I P52 per unit 0 Sellers are keeping 34 for themselves 52 18 0 TaX Revenue 18X12 216 I Consumers effectively pay U 52 4012 144 I Sellers effectively pay U 40 3412 72 0 Deadweight loss to taxation I 12 52 34 15 12 27 Subsidies Example Original free market Equilibrium P100 amp Q1OO million 1 00 085 100 110 Q Subsidy had created a wedge TaX payers are getting screwed o Might not be buying the product Tobacco Settlement of 1998 25 states sued the large tobacco companies Agreed to pay 250 billion back to state treasuries every year Amount they own according to the settlement is a per unit sales tax 0 Majority of this sells tax is being collected from buyers of tobacco products 0 Sales tax has increased the equilibrium price of tobacco Smoking is connected to income Competition by Price Eliminating excess demand or supply P Excess S Supply Price Control Excess Degand D Q Price Controls 0 If market doesn t control price of a demanded good rationing Will happen some how Look online at reVieW sheets on topics for Midterm Go over past exams
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