ECON 1201 Chapter Notes - Chapter 6: Tax Wedge, Demand Curve, Deadweight Loss

• School: UConn
• Department: Economics
• Course: ECON 1201
• Professor: Ria Bhattacharya

Document Summary

Fun fact: people may postpone/hurry a death or birth to save on taxes. 6. 2 who ultimately pays the tax does not depend on who writes the check. Tax can either be put on the seller for selling a good or buyer for buying the good. However, a tax on the seller has the same effect as a tax on the buyer. If the tax is set on the seller. The supply curve will be shifted up at every quantity at exactly the tax amount because they need to increase price to receive the desired profit. The price they are willing to buy a good is less since they also have to put into account taxes. However this does not mean the selling price increases by exactly the tax amount. Now the equilibrium has changed, and the selling price is marked by the new equilibrium point. If the tax is set on the buy.