FMSC 290 Lecture Notes - Lecture 20: Deadweight Loss, Perfect Competition, Economic Surplus
1 May 2018
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Lecture April 10th, 2018
Participation: Chapter 1-10, watch every lecture videos, write down bullet points of things I have
learned, and then one paragraph/statement telling if I have learned a lot. Due in two weeks. Today
is the 10th, so this is due on the 24th. Concluding statement is at least a paragraph, have you learned
anything, or not? Can I look at life slightly like an economist? Email him.
Lecture April 12th, 2018
• Cost of taxation
• If government comes and imposes tax graph
• tax on good levied on buyers
o demand curve shifts leftward
▪ by the size of the tax
o tax on a good levied on sellers
▪ supply curve shifts leftward
• by the size of the tax
• tax on a good levied on buyers or sellers
o same outcome: a price wedge
o price paid by buyers rises
o price received by sellers lowers
o lower quantity sold
• tax burden
o distributed between producers and consumers
o determined by elasticities of supply and demand
• market for a good
o smaller
• economic welfare
o buyers: consumer surplus
o sellers: producer surplus
o government: total tax revenue
▪ tax times quantity sold
▪ public benefit from the tax
• price elasticities of supply and demand
o more elastic supply curve
▪ large deadweight loss
o more elastic demand curve
▪ larger deadweight loss
Lecture April 24th, 2018
• the equilibrium without international trade
• government wants people to be more educated, they need revenue, so they tax and give
that money to state tuition
• we can use taxes to help the imperfect market for things such as health care or cigarettes
o enhance the welfare of a society
• to compute the equation, and policy analysis, you need to know how to get the area of a
triangle and that is all
find more resources at oneclass.com
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