ECON101 Lecture Notes - Economic Equilibrium, Deadweight Loss, Equilibrium Point
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ECON101 Full Course Notes
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Tax on sellers: supply curve shifts leftward, get a new equilibrium point, the new equilibrium price is the price paid by buyers. Draw a vertical line downward, the intersect with original supply curve: its price is the price received by sellers: compare the price paid by buyers, the price received by sellers with the original equilibrium price Tax on buyers: the demand curve shifts leftward, get a new equilibrium point, the new equilibrium price is the price received by sellers. Draw a vertical line, the intersect with the demand curve: its price is the price paid by buyers: compare the price paid by buyers, the price received by sellers with the original equilibrium price Once we put a tax on either buyers or sellers, the market has underproduction and has a dead-weight loss. The consumer surplus and producer surplus are decreasing.