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Unformatted text preview: 5x$10 = $50 T s – total surplus $105 $100 Deadweight loss (DWL) = $5 $10 Tax on sellers P B = $20, Q D = 7 P S = $10, Q S = 3 Shortage, buyers willing to pay more P B = $22, Q D = 6 P S = $12, Q S =4 Shortage P B = $14, Q D = 5 P S = $24, Q S = 5 Without Tax With Tax CS A+B+E A PS C+D+F D G---B+C TS A => F A=> D DWL = E+F Free goods = competitive market will not be efficient Negative Externality = impose cost on someone else (secondhand smoke) Positive Externality = impose benefit on someone else (asking a question)...
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This note was uploaded on 03/31/2009 for the course ECON 101 taught by Professor Balon during the Spring '09 term at Linn Tech.
- Spring '09