Excise Tax P $14 12 11 8 S D 10 12 Q.

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Presentation transcript:

Excise Tax P $14 12 11 8 S D 10 12 Q

Excise Tax 12 P Stax $14 11 8 S Pc Pp D 10 10 12 Q Calculate Tax Per Unit Total Tax Revenue Amount of Tax paid by consumers Amount of Tax paid by producers Total Expenditures Total Revenue for firms P Stax $14 12 11 8 S Pc Pp D 10 10 12 Q

Excise Tax 12 P Stax S $14 11 8 D 12 10 Q Answers $3 $30 $20 $10 $140 $110 P Stax $14 12 11 8 S D 10 12 Q

Excise Tax P Stax $8 S $6 $5 $4 $2 D 6 Q 9 Calculate CS Before Tax PS Before Tax Total Surplus Before Tax CS After Tax PS After Tax Tax Revenue to the Government Dead Weight Loss After Tax B/W the two points is demand inelastic, elastic, or unit elastic? P Stax $8 $6 $5 $4 $2 S D 6 9 Q

Price went up and TR went down Excise Tax Answers $13.5 $27 $6 $12 $3 Relatively elastic Total Revenue Test $5x9=$45 $6X6=$36 Price went up and TR went down P Stax $8 $6 $5 $4 $2 S D 6 9 Q