ECON 221 Chapter Notes - Chapter 6: Economic Surplus, Opportunity Cost, Deadweight Loss

• School: Cal Poly
• Department: Economics
• Course: ECON 221
• Professor: Jonathan James

Document Summary

Taxes and subsidies are payments from the government for production. Commodity taxes are taxes on goods, such as fuel, liquor, and cigarettes. 1 who ultimately pays the tax does not depend on who writes the check. A tax has the same effect for buyers and sellers (whether it is on the demand or. A tax is an increase in cost for sellers. No tax = sell /basket to sell 250 baskets. tax = sell /basket to sell the same quantity baskets (250) A tax shifts the supply curve up by exactly . A tax will increase the equilibrium price paid and decrease the equilibrium quantity in the market. The tax = price paid by buyers - price received by sellers. Price paid by buyers is after shift (new equilibrium price) Price received by sellers is before shift or the price they bought the goods at before the tax (old equilibrium price)