ECON 1B03 Lecture Notes - Deadweight Loss, Price Elasticity Of Demand, Demand Curve
53 views8 pages
1 Mar 2013
School
Department
Course
Professor
![ECON 1B03 Full Course Notes](https://new-docs-thumbs.oneclass.com/doc_thumbnails/list_view/2152268-class-notes-ca-mcmaster-econ-1b03-lecture1.jpg)
46
ECON 1B03 Full Course Notes
Verified Note
46 documents
Document Summary
Econ 1b03 chapter 6&8 supply, demand & government policies. The deadweight loss of taxation ch 8. Note: taxes, whenever there is per unit sales tax it"s going to decrease the quantity traded in the market and whenever we are not in market equilibrium there will be deadweight loss. Since a tax places a burden on consumers and suppliers and reduces the quantity traded in the market compared to the non-tax equilibrium quantity, we know there will be a deadweight loss. The government"s tax revenues are a benefit for them and a benefit for the recipients when the government spends that revenue on social programs. But ultimately, consumers and producers lose out. A tax on a good reduces consumer surplus and producer surplus. On the following diagram, total surplus is the area of abc. A tax reduces the quantity traded, increases the price consumers pay and decreases the price suppliers receive. The new cs is triangle a on the following diagram.
Get access
Grade+
$40 USD/m
Billed monthly
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers
Class+
$30 USD/m
Billed monthly
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
7 Verified Answers