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Ch. 6 Taxes
Terms in this set (18)
a per unit tax on goods/services
who pays the tax does not depend on who writes the check to the government. True or False
who bares the tax burden depends on Ed/Es. true or false
taxation, increases government revenue and creates dead weight loss. true or false.
the more inelastic of the group
who bears the greater burden?
How do you escape the burden of the tax?
whoever has the biggest space between them and equilibrium or the larger difference
graphically how do you determine who bears the greater tax burden?
workers are suppliers or demanders? Employers are suppliers or demanders?
trade that no longer takes place due to a tax
dead weigh loss
r=PxQ, where price is the tax per unit and Q is the number of units exchanged.
how to calculate revenue?
split the triangle in half, calculate the area (1/2bxh) of that triangle and multiply by 2.
How to calculate DWL?
gov revenue triangle is dead weight loss
how everything looks on a graph
the more elastic the demand curve is the > __________ is?
reverse tax, are paid by tax payer and creates waste
subsidy wedge starts from the __________, where as the tax wedge gets inserted from the left.
for tax, Ps is on the top and Pb is on the bottom but for subsidy these??
subsidy per unit times number of units exchanged
or tax wedge times final Q(2)
cost of subsidy equation
sellers require more to produce than buyers are willing and able to pay
waste occurs when...
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