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Unformatted text preview: the Inefficiency of Taxation Deadweight loss on different types of goods #ormal Inferior 12 Deadweight loss on the utility maximization graph hats Golf clubs x 1 (p 1 1 ) x 1 (p 1 +t) p 2 A problem with Consumer Surplus We do not stay on the same ______________________ when the price changes. Alternative definition is based on: Compensated Demand Curves – A demand curve without the _________________, following price changes along the same __________________. Compensated Demand Curves shift when ______ changes. 13 Marginal Willingness to Pay Graphing the Difference between Marshallian Demand & Compensated Demand Curves for a Normal Good 14 When will Demand & Marginal Willingness to Pay Curves be the same? The Math: The Graph: x $ What are still the inherent problems for welfare analysis in the assumptions?...
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 Spring '08
 Woroch
 Supply And Demand, Inferior Goods

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