Taxes - amount of the tax Tax shared between the tax and...

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9/29/11 Economics Taxes pay for national defense, public schools, etc. The government can make buyers or sellers pay the tax. Ex: percentage-advalorum tax-sales tax For simplicity, we analyze per-unit taxes only. Specific tax For tax: a new demand curve has to be made, demand curve shifts the left  because a new equalibrium has to be made because it shifts down by the 
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Unformatted text preview: amount of the tax Tax shared between the tax and the sellers If the tax is only on the sellers than the willingness to sell doesn’t change but the price goes up, it is a parallel shift The Outcome Is the Same in Both Cases! The effects on P and Q , and the tax incidence are the same whether the tax is imposed on buyers or sellers!...
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This note was uploaded on 11/16/2011 for the course ECON 1011 taught by Professor Irenefoster during the Fall '11 term at GWU.

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