19 download_doc-1.php

19 download_doc-1.php - EX: 7% o Tax Base: EX: purchases of...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
January 21, 2009 Day 2 Slide 7 o The idea of “Markets” Think about fruit… kiwi o Efficiency: Consumer value + Cost Slide 8 o Efficiency Not what’s best for firm, but society o (1) Consumer value exceeds Production costs Thus is would still be efficient to make more o (2) Producing units that cost more than consumer willingness to pay o Government/ Activists Get involved when firm deviates from Q e Slide 9 o Increased prices to buyers Consumer Surplus Decreases o Decreased Prices to Sellers Producer Surplus Decreases
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
o Sellers view taxes as increases in production costs EX: Gas tax Slide 10 o Tax Rate:
Background image of page 2
Background image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: EX: 7% o Tax Base: EX: purchases of non food items Is inversely related to tax rate o Some optimal rate will maximize revenue o Revenue = rate * base Slide 11 o The change in the tax base is larger than the change in tax rate o Above t* base wins: Revenue moves in same direction o The change in the tax rate is larger than the change in the tax base o Below t* Revenue moves with rate Slide 12 o Credit = incentive o Who is behind the passage of this act? Farm lobby o What affect has it had on the SUV market? Weight of SUV includes cargo Demand skyrocketed...
View Full Document

Page1 / 3

19 download_doc-1.php - EX: 7% o Tax Base: EX: purchases of...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online