Microeconomics_ Unit 6_ Taxes.pdf - Alex Gerasimov 2019 Microeconomics ECON 1010 Unit 6(Chapter 7 Taxes \u25cf Excise Taxes(Sales Taxes depends on the

Microeconomics_ Unit 6_ Taxes.pdf - Alex Gerasimov 2019...

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Alex Gerasimov, 2019 Microeconomics: ECON 1010: Unit 6 (Chapter 7): Taxes: Excise Taxes (Sales Taxes, depends on the value of goods sold): - Both sides of the market usually share the burden of a tax (buyers and sellers). - Excise tax reduces the number of goods sold and increases government revenue. - Setting a tax rate so high that it deters a significant number of transactions is likely to lead to a fall in tax revenue - Taxes prevents mutually beneficial transactions from occurring - An excise tax is the easiest tax to analyze. However, in Canada today, excise taxes are actually a relatively minor source of government revenue. - If the tax is imposed on suppliers, the equilibrium price increases if on consumers, the equilibrium price decreases. Equilibrium quantity stays unaffected by whoever is asked to pay the tax. - The incidence of a tax is a measure of who incurs the burden of a tax (wich consumer or producer surplus decreases the most) and it depends on price elasticity used in supply and demand.

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