Principles of Economics- Mankiw (5th) 155

Principles of Economics- Mankiw (5th) 155 - in part because...

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IN THIS CHAPTER YOU WILL . . . Examine how tax revenue and deadweight loss vary with the size of a tax Consider why some taxes have larger deadweight losses than others Examine how taxes reduce consumer and producer surplus Learn the meaning and causes of the deadweight loss of a tax Taxes are often a source of heated political debate. In 1776 the anger of the Ameri- can colonies over British taxes sparked the American Revolution. More than two centuries later Ronald Reagan was elected president on a platform of large cuts in personal income taxes, and during his eight years in the White House the top tax rate on income fell from 70 percent to 28 percent. In 1992 Bill Clinton was elected
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Unformatted text preview: in part because incumbent George Bush had broken his 1988 campaign promise, “Read my lips: no new taxes.” We began our study of taxes in Chapter 6. There we saw how a tax on a good affects its price and the quantity sold and how the forces of supply and demand di-vide the burden of a tax between buyers and sellers. In this chapter we extend this analysis and look at how taxes affect welfare, the economic well-being of partici-pants in a market. A P P L I C A T I O N : T H E C O S T S O F T A X A T I O N 161...
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This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.

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