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Lecture 34

ECON 1010 Lecture 34: Lecture 34

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ECON 1010
Laura K.Brown

lc78 1. All governments use taxes to raise revenue for public projects, such as roads, schools, and national defense 2. When the government levies a tax on a good, who bears the burden of the tax? The people buying the good? The people selling the good? Or if they share the burden how is it divided? 3. Tax incidence: the manner in which the burden of a tax is shared among participants in a market 4. The tax can be a percentage of the goods price or a specific amount for each unit sold – we only look at unit taxes for simplicity 5. Excise tax: imposed on the seller and then paid to the government 6. Market clearing: when quantity demand equals quantity supplied – equilibrium How Taxes on Buyers Affect Market Outcomes: 7. 1. We decide whether the law affects the supply curve or demand curve 8. 2. We decide which way the curve shifts 9. 3. We examine how the shift affects the equilibrium 10.A tax on buyers shifts the demand curve down by the amount of the tax 11.The price buyers
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