LESON20B

LESON20B - Econ 275 - Public Finance - Winter 1994 -...

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Econ 275 - Public Finance - Winter 1994 - 3/17/94 - Lesson #20 - leson20b.275-- Page -- Admin: Reading #5 due today. Discuss at beginning of class Ch 11 - Taxation and efficiency (see leson23a.475, leson19a.275 and leson20a.275) Inefficiency shown with indifference curve analysis. Compare excise tax and lump sum tax. Partial Equilibrium Analysis When can this type of analysis be used. Excise (or commodity) taxes Use the overheads. Harvard Graphics taxinc1.prs, dtaxinc2.prs Shift in demand is perception on part of suppliers. Shift in Supply is perception on the part of consumers. Presentation: First draw a standard graph (for cigarettes) on the board. Use numbers from one of my overheads. Talk about equilibrium. Now the thought experiment of imposing an excise tax. Key difference is that now there are two prices, one for suppliers and one for consumers with the difference being the tax. Emphasize that preferences and costs have not changed so the demand and the supply curves remain unchanged. How to avoid
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LESON20B - Econ 275 - Public Finance - Winter 1994 -...

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