ECO101H1 Lecture Notes - Lecture 14: Sunscreen, Equilibrium Point, Deadweight Loss
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ECO101H1 Full Course Notes
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Eco100y1 lecture 14 topic 7: application: the costs of taxation. Remember: a tax creates a wedge between the price paid by buyers and the amount received by sellers by increasing the price paid and lowering the price received. A tax has the same effect on price and quantity regardless of whether it"s imposed on the buyers or the sellers. Indicate equilibrium price and quantities before tax, also shows amount paid by buyers and received by sellers after the tax. To find the amount of tax revenue, use qt bought/sold) (slide 4) (the size of the tax and the quantity. Then there isn"t free market equilibrium, there is distortion in our free markets. We need to be able to find the total surplus in the market with and without tax. Tax revenue funds beneficial services, so we add the amount of tax revenue to consumer surplus (cs) and producer surplus (ps).
, solve for deadweight loss as a function of T. 
