(微观经济学英文ppt课件)Chap-8-Application：The-Costs-of-Taxatio

Click to edit Master title style,Click to edit Master text styles,Second Level,Third Level,Fourth Level,Fifth Level,Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.,(微观经济学英文课件）Chap 8 Application：The Costs of Taxation,The Costs of Taxation,How do taxes affect the economic well-being of market participants?,Unit 1 how a Tax Affects Welfare,Unit 2,deadweight loss,and Elasticities,Unit 3 deadweight Loss and Tax Revenue,Unit 1 How a Tax Affects Welfare,Price,0,Quantity,Quantity without tax,Supply,Demand,Price without tax,Price buyers pay,Quantity with tax,Size of tax,Price sellers receive,A tax places a wedge between the price buyers pay and the price sellers receive.,Because of this tax wedge, the quantity sold falls below the level,The,size of the market for that good shrinks.,Price,0,Quantity,Quantity without tax,Supply,Demand,Price sellers receive,Quantity with tax,Size of tax (T),Quantity sold (Q),Tax Revenue (T,x,Q),Price buyers pay,Quantity,0,Price,Demand,Supply,Q,1,A,B,C,F,D,E,Q,2,Tax reduces consumer surplus by (B+C) and producer surplus by (D+E),Tax revenue = (B+D),Deadweight Loss = (C+E),Price,buyers,pay,=,P,B,P,1,Price without tax,=,P,S,Price sellers receive,=,Changes in Welfare from a Tax,Without Tax,With Tax,Change,Consumer Surplus,A + B + C,A,- (B + C),Producer Surplus,D + E + F,F,- (D + E),Tax Revenue,none,B + D,+ (B + D),Total Surplus,A + B + C + D + E + F,A + B + D + F,- (C + E ),The area C+E shows the fall in total surplus and is the,deadweight loss,of the tax.,Taxes have a deadweight loss because they cause buyers to consume less and sellers to produce less.,Unit 2,Deadweight loss,and Elasticities,What the determinants of deadweight loss?,depends on the,price elasticities,of supply and demand.,Quantity,Price,Demand,Supply,0,When supply is,relatively inelastic,the deadweight loss,of a tax is small.,(a) Inelastic Supply,Size of tax,Quantity,Price,Demand,Supply,0,Size of tax,When supply is,relatively elastic,the deadweight loss,of a tax is large.,(b) Elastic Supply,Quantity,Price,Demand,Supply,0,When demand is,relatively inelastic,the deadweight loss,of a tax is small.,(c) Inelastic Demand,Size of tax,Quantity,Price,Demand,Supply,0,Size of tax,When demand is,relatively elastic,the deadweight loss,of a tax is large.,(d) Elastic Demand,Conclusion:,The greater the elasticities :,the larger will be the decline,in,quantity,the greater the deadweight loss of a tax, the greater,tax distortion,.,Unit 3 Deadweight Loss and Tax Revenue,When the tax size changes, what happened to the deadweight loss and tax revenue?,P,B,Quantity,Q,2,0,Price,Q,1,Demand,Supply,Tax revenue,P,S,Deadweight,loss,(a) Small Tax,Demand,Supply,Tax,revenue,P,B,Quantity,Q,2,0,Price,Q,1,P,S,Deadweight,loss,(b) Medium Tax,Tax revenue,P,B,Quantity,Q,2,0,Price,Q,1,Demand,Supply,P,S,Deadweight,loss,(c) Large Tax,As the size of a tax increases, its deadweight loss quickly gets larger.,Why?,Conclusion 1:tax size and,deadweight loss,Deadweight,Loss,0,Tax Size,Conclusion 2:tax size and tax revenue,For the small tax, tax revenue is small.,As the size of the tax rises, tax revenue grows.,But as the size of the tax continues to rise, tax revenue falls because the higher tax reduces the,market quantity.,Revenue (the Laffer curve),Tax,Revenue,0,Tax Size(rate),The,Laffer curve,depicts the relationship between tax rates and tax revenue.,Supply-side economics,refers to the views of Reagan and Laffer who proposed that a tax cut would induce more people to work and thereby have the potential to increase tax revenues.,E,xercise,P173 1 (problems and applications),P174 8,Without a tax:,total spending by consumers,=total revenue for producers,=,P,1 x,Q,1,= B+C+D+E+F, government revenue=0,imposition of a tax:,total spending by consumers,=,P,B x,Q,2 =A+B+C+D,total revenue for producers,=,P,S x,Q,2, =C+D,government tax revenue =,Q,2 x tax= A+B.,