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ECON101 (300)
Lecture

Tax Effects.docx

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Department
Economics
Course
ECON101
Professor
Yasser Fahmy
Semester
Winter

Description
Chap8 Application the Costs of TaxationWelfare economics is the study of how the allocation of resources affects economic wellbeingBuyers and sellers receive benefits from taking part in the marketThe equilibrium in a market maximizes the total welfare of buyers and sellersDeadweight loss of taxation How do taxes affect the economic wellbeing or market participantsIt does not matter whether a tax on a good is levied on buyers or sellers of the goodthe price paid by buyers rises and the price received by sellers falls A tax places a wedge between the price buyers pay and price sellers receive Because of this tax wedge the quantity sold falls below the level that would be sold without a tax The size of the market for that good shrinks
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