2nd econ exam

demand for the product is more elastic than the supply of the product
Sellers of a product will bear the larger part of the tax burden, and buyers will bear a smaller part of the tax burden, when the
total surplus
can be used to measure a market's efficiency
total surplus
is the to value to buyers minus the cost to sellers.
total surplus
is the sum of consumer and producer surplus.
total surplus is maximized
We can say that the allocation of resources is efficient if
willingness to pay
measures the value that a buyer places on a good.
deadweight loss.
The decrease in total surplus that results from a market distortion, such as a tax, is called a
A legal maximum on the price at which a good can be sold is called a price
above the equilibrium price, causing a surplus
A price floor is binding when it is set
regardless of how the tax is levied
When a tax is levied on a good, the buyers and sellers of the good share the burden,
tax incidence
the distribution of the tax burden between buyers and sellers
the tax wedge between producers & consumers prevents beneficial transactions from occurring
Why do taxes cause dead weight loss?