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    Tax and Elasticity

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    Lehandre' Crous
    The document shows four graphs of supply and demand for MP3 players. It analyzes how a $20 per unit tax affects tax revenue and deadweight loss at different quantities. As quantity increases from 0 to 10 thousand units per week across the four graphs, tax revenue increases from $80,000 to $96,000 while deadweight loss decreases from $10,000 to $2,000. The text explains that tax revenue is larger and deadweight loss is smaller when demand and supply are relatively inelastic.

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    Tax and Elasticity

    Uploaded by

    Lehandre' Crous
    27 views5 pages
    The document shows four graphs of supply and demand for MP3 players. It analyzes how a $20 per unit tax affects tax revenue and deadweight loss at different quantities. As quantity increases from 0 to 10 thousand units per week across the four graphs, tax revenue increases from $80,000 to $96,000 while deadweight loss decreases from $10,000 to $2,000. The text explains that tax revenue is larger and deadweight loss is smaller when demand and supply are relatively inelastic.

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    tax and elasticity

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    The document shows four graphs of supply and demand for MP3 players. It analyzes how a $20 per unit tax affects tax revenue and deadweight loss at different quantities. As quantity increases from 0 to 10 thousand units per week across the four graphs, tax revenue increases from $80,000 to $96,000 while deadweight loss decreases from $10,000 to $2,000. The text explains that tax revenue is larger and deadweight loss is smaller when demand and supply are relatively inelastic.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    27 views5 pages

    Tax and Elasticity

    Uploaded by

    Lehandre' Crous
    The document shows four graphs of supply and demand for MP3 players. It analyzes how a $20 per unit tax affects tax revenue and deadweight loss at different quantities. As quantity increases from 0 to 10 thousand units per week across the four graphs, tax revenue increases from $80,000 to $96,000 while deadweight loss decreases from $10,000 to $2,000. The text explains that tax revenue is larger and deadweight loss is smaller when demand and supply are relatively inelastic.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    of 5

    P r ice (d o lla rs p e r M P 3 p la

    Belasting inkome / Tax


    revenue = $20*4000 =
    S + tax
    $80 000
    S
    260
    250
    240 Dooiegewigsverlies /
    230 Deadweight loss = ½
    220 ($20)*1000 = $10 000
    210
    200
    190
    180
    170
    D
    160
    150
    140
    0 1 2 3 4 5 6 7 8 9 10

    Quantity (thousands of MP3 players per week)


    P r ic e (d o lla r s p e r M P 3
    S + tax
    Belasting inkome / Tax S
    revenue = $20*4600 =
    $92 000
    260
    250
    240
    230
    Dooiegewigsverlies /
    220
    Deadweight loss = ½
    210
    ($20)*400 = $4000
    200
    190
    180
    170
    160
    150
    D
    140
    0 1 2 3 4 5 6 7 8 9 10

    Quantity (thousands of MP3 players per week)


    P r ic e (d o lla r s p e r M P 3
    S + tax
    Belasting inkome / Tax
    revenue = $20*4600 =
    $92 000
    S

    260
    250
    Dooiegewigsverlies /
    240
    Deadweight loss = ½
    230
    ($20)*400 = $4000
    220
    210
    200
    190
    180
    170
    D
    160
    150
    140
    0 1 2 3 4 5 6 7 8 9 10

    Quantity (thousands of MP3 players per week)


    P r ic e (d o lla r s p e r M P 3 S + tax
    S
    Belasting inkome / Tax
    revenue = $20*4800 =
    260
    $96 000
    250 Dooiegewigsverlies /
    240 Deadweight loss = ½
    230 ($20)*200 = $2 000
    220
    210
    200
    190
    180
    170
    160
    150
    D
    140
    0 1 2 3 4 5 6 7 8 9 10

    Quantity (thousands of MP3 players per week)


    Belasting en Elastisiteit / Tax and Elasticity

    • Belasting inkome word al groter hoe meer


    relatief onelasties vraag en/of aanbod is / Tax
    revenue becomes larger the more relatively
    inelastic demand and/or supply is
    • Die dooiegewigsverlies van belasting word al
    kleiner hoe meer relatief onelasties vraag
    en/of aanbod is / The deadweight loss from tax
    becomes smaller the more relatively inelastic
    demand and/or supply is

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