Copyright © 2006 Thomson Learning 8 Application: The Costs of Taxation.

Slides:



Advertisements
Similar presentations
Chapter Sixteen Equilibrium. Market Equilibrium  A market is in equilibrium when total quantity demanded by buyers equals total quantity supplied by.
Advertisements

1 Equilibrium Molly W. Dahl Georgetown University Econ 101 – Spring 2009.
8 Application: The Costs of Taxation. CHAPTER 8 APPLICATION: THE COSTS OF TAXATION 2 The Effects of Taxation We saw in Chapter 6 how taxesChapter 6 –reduce.
Copyright©2004 South-Western 8 Application: The Costs of Taxation.
LECTURE #7: MICROECONOMICS CHAPTER 8
3 SUPPLY AND DEMAND II: MARKETS AND WELFARE. Copyright © 2004 South-Western 7 Consumers, Producers, and the Efficiency of Markets.
Chapter Application: The Costs of Taxation 8. The Deadweight Loss of Taxation Tax on a good – Levied on buyers Demand curve shifts downward by the size.
© 2007 Thomson South-Western, all rights reserved N. G R E G O R Y M A N K I W PowerPoint ® Slides by Ron Cronovich 8 P R I N C I P L E S O F F O U R T.
Application: The Costs of Taxation
Copyright © 2004 South-Western 5 Elasticity and Its Application.
1 Applications of Supply & Demand Chapter 4. 2 Model this using a S & D diagram But an even bigger problem is the consumers themselves. That's because.
Chapter 15 APPLIED COMPETITIVE ANALYSIS Copyright ©2002 by South-Western, a division of Thomson Learning. All rights reserved. MICROECONOMIC THEORY BASIC.
Application: The Costs of Taxation Chapter 8 Copyright © 2004 by South-Western,a division of Thomson Learning.
Applications: The Costs of Taxation & International Trade
Application: The Costs of Taxation Chapter 8 Figure 1 The Effects of a Tax Copyright © 2004 South-Western Size of tax Quantity 0 Price Price buyers pay.
The Effects of a Tax... Supply Demand Price Size of tax per unit
© 2007 Thomson South-Western. Application: The Costs of Taxation Welfare economics is the study of how the allocation of resources affects economic well-
Consumer and Producer Surplus Lecture 8. Assignment for Next Lecture Do Homework 6 on ‘Homework Assignment’ due on Sunday, 11:55 PM Read Chapter 7 Topics.
Copyright©2004 South-Western 8 Application: The Costs of Taxation.
Copyright©2004 South-Western 8 Applications: The Costs of Taxation.
Application: The Costs of Taxation
Taxes & Deadweight Loss
Applications of Supply and Demand Chapter 4 Price Controls Floor Ceilings Who benefits from each: sellers or buyers?
Application: The Costs of Taxation
Consumer and Producer Surplus: Effects of Taxation
Principles of Micro Chapter 8: “Application: The Cost of Taxation” by Tanya Molodtsova, Fall 2005.
THE COSTS OF TAXATION MR. BARNETT UNIVERSITY HIGH AP MICROECONOMICS.
Copyright©2004 South-Western 8 Application: The Costs of Taxation.
Application: The Costs of Taxation Chapter 8 Copyright © 2001 by Harcourt, Inc. All rights reserved. Requests for permission to make copies of any part.
Chapter 8 notes.
Chapter 8 The Costs of Taxation Ratna K. Shrestha.
Application: The Cost of Taxation
The Incidence of Taxation. The incidence of taxation Indirect taxes.
A PPLICATIONS : D EADWEIGHT L OSS ETP Economics 101.
Copyright©2004 South-Western 8 Application: The Costs of Taxation.
Chapter 8 The Costs of Taxation. Objectives 1. Understand how taxes reduce consumer and producer surplus 2. Learn the causes and significance of the deadweight.
MACROECONOMICS Application: The Costs of Taxation CHAPTER EIGHT 1.
Copyright © 2004 South-Western/Thomson Learning Happy Tuesday Take out your homework and please write the number of any question(s) that you would to go.
Copyright © 2006 Thomson Learning 15 Monopoly. Figure 1 Economies of Scale as a Cause of Monopoly Copyright © 2004 South-Western Quantity of Output Average.
TAXATION The Effect of Taxation on Economic Welfare.
Ed = 8.3 (using mid-point method)
A PPLICATIONS : D EADWEIGHT L OSS ETP Economics 101.
APPLICATIONS OF WELFARE ECONOMICS: THE COST OF TAXATION
Copyright © 2004 South-Western/Thomson Learning Application: The Costs of Taxation Welfare economicsWelfare economics is the study of how the allocation.
IB Economics HL Topics Indirect Taxes, Subsidies and Price Controls.
Copyright © 2006 Nelson, a division of Thomson Canada Ltd. 8 Application: The Costs of Taxation.
Copyright © 2004 South-Western/Thomson Learning Application: The Costs of Taxation Recall that welfare economicsRecall that welfare economics is the study.
Effect of a tax on price and quantity S + tax S O P1P1 Q1Q1 D P Q.
Deadweight Loss Retained CS Tax Rev From CS Tax Rev From CS Retained PS.
The costs of taxation. Tax Usually taxes are collected because government wants to run the country. Some people believe that all taxation creates market.
Economic Analysis for Business Session X: Consumer Surplus, Producer Surplus and Market Efficiency-2 Instructor Sandeep Basnyat
8 Application: The Costs of Taxation. Welfare economics Welfare economics is the study of how the allocation of resources affects economic well- being.
Application: The Costs of Taxation
Application: The Costs of Taxation
Application: The Costs of Taxation
Application: The Costs of Taxation
Application: The Costs of Taxation
Application: The Costs of Taxation
Application: The Costs of Taxation
Application: The Costs of Taxation
Application: The Costs of Taxation
Application: The Costs of Taxation
Application: The Costs of Taxation
Application: The Costs of Taxation
Application: The Costs of Taxation
Application: The Costs of Taxation
Application: The Costs of Taxation
© 2007 Thomson South-Western
Application: The Costs of Taxation
Application: The Costs of Taxation
Presentation transcript:

Copyright © 2006 Thomson Learning 8 Application: The Costs of Taxation

Figure 1 The Effects of a Tax Copyright © 2004 South-Western Size of tax Quantity 0 Price Price buyers pay Price sellers receive Demand Supply Price without tax Quantity without tax Quantity with tax

Figure 2 Tax Revenue Copyright © 2004 South-Western Tax revenue (T × Q) Size of tax (T ) Quantity sold (Q) Quantity 0 Price Demand Supply Quantity without tax Quantity with tax Price buyers pay Price sellers receive

Figure 3 How a Tax Effects Welfare Copyright © 2004 South-Western A F B D C E Quantity 0 Price Demand Supply = PBPB Q2Q2 = PSPS Price buyers pay Price sellers receive = P1P1 Q1Q1 Price without tax

Copyright © 2006 Thomson Learning How a Tax Affects Welfare

Figure 4 The Deadweight Loss Copyright © 2004 South-Western Cost to sellers Value to buyers Size of tax Quantity 0 Price Demand Supply Lost gains from trade Reduction in quantity due to the tax Price without tax Q1Q1 PBPB Q2Q2 PSPS

Figure 5 Tax Distortions and Elasticities Copyright © 2004 South-Western (a) Inelastic Supply Price 0Quantity Demand Supply Size of tax When supply is relatively inelastic, the deadweight loss of a tax is small.

Figure 5 Tax Distortions and Elasticities Copyright © 2004 South-Western (b) Elastic Supply Price 0 Quantity Demand Supply Size of tax When supply is relatively elastic, the deadweight loss of a tax is large.

Figure 5 Tax Distortions and Elasticities Copyright © 2004 South-Western Demand Supply (c) Inelastic Demand Price 0 Quantity Size of tax When demand is relatively inelastic, the deadweight loss of a tax is small.

Figure 5 Tax Distortions and Elasticities Copyright © 2004 South-Western (d) Elastic Demand Price 0 Quantity Size of tax Demand Supply When demand is relatively elastic, the deadweight loss of a tax is large.

Copyright © 2006 Thomson Learning Figure 6 Deadweight Loss and Tax Revenue from Three Taxes of Different Sizes Copyright © 2004 South-Western Tax revenue Demand Supply Quantity 0 Price Q1Q1 (a) Small Tax Deadweight loss PBPB Q2Q2 PSPS

Figure 6 Deadweight Loss and Tax Revenue from Three Taxes of Different Sizes Copyright © 2004 South-Western Tax revenue Quantity 0 Price (b) Medium Tax PBPB Q2Q2 PSPS Supply Demand Q1Q1 Deadweight loss

Figure 6 Deadweight Loss and Tax Revenue from Three Taxes of Different Sizes Copyright © 2004 South-Western Tax revenue Demand Supply Quantity 0 Price Q1Q1 (c) Large Tax PBPB Q2Q2 PSPS Deadweight loss

Figure 7 How Deadweight Loss and Tax Revenue Vary with the Size of a Tax Copyright © 2004 South-Western (a) Deadweight Loss Deadweight Loss 0 Tax Size

Figure 7 How Deadweight Loss and Tax Revenue Vary with the Size of a Tax Copyright © 2004 South-Western (b) Revenue (the Laffer curve) Tax Revenue 0 Tax Size

Feedback: Privacy Policy Feedback
Do Not Sell My Personal Information
About project: SlidePlayer Terms of Service

© 2025 SlidePlayer.com. Inc. All rights reserved.