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The imposition of a per-unit tax on Supply Exhibit the effect of the tax on: Pre-tax Price and Quantity Pre-tax Total expenditure on the good Pre-tax Producer.

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Presentation on theme: "The imposition of a per-unit tax on Supply Exhibit the effect of the tax on: Pre-tax Price and Quantity Pre-tax Total expenditure on the good Pre-tax Producer."— Presentation transcript:

1 The imposition of a per-unit tax on Supply Exhibit the effect of the tax on: Pre-tax Price and Quantity Pre-tax Total expenditure on the good Pre-tax Producer and Consumer surplus Effect of a per-unit tax on the Supply curve Post-tax equilibrium Price and Quantity Post-tax Price charged to buyers Post-tax Price received by sellers Post-tax Total expenditure on the good Post-tax revenue received by sellers Tax take by Government Post-tax Producer and Consumer Surplus

2 S D0D0 Price 0 Quantity Q0Q0 P0P0 Pre-Tax Equilibrium

3 S D0D0 Price 0 Quantity Q0Q0 P0P0 Pre-Tax Equilibrium Total Expenditure A

4 S D0D0 Price 0 Quantity Q0Q0 P0P0 Consumer Surplus Producer Surplus Pre-Tax Equilibrium

5 S D0D0 S1S1 Price 0 Quantity Q0Q0 Q1Q1 P0P0 P1P1 P2P2 Post-Tax Equilibrium A B C T

6 S D0D0 S1S1 Price 0 Quantity Q0Q0 Q1Q1 P0P0 P1P1 P2P2 Post-Tax Equilibrium A B C Revenue to Suppliers

7 S D0D0 S1S1 Price 0 Quantity Q0Q0 Q1Q1 P0P0 P1P1 P2P2 Post-Tax Equilibrium A B C Expenditure by Consumers

8 S D0D0 S1S1 Price 0 Quantity Q0Q0 Q1Q1 P0P0 P1P1 P2P2 Post-Tax Equilibrium A B C Tax take by Government

9 S D0D0 S1S1 Price 0 Quantity Q0Q0 Q1Q1 P0P0 P1P1 P2P2 Post-Tax Equilibrium A B C Consumer Surplus Producer Surplus


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