ECO 1104 Lecture Notes - Deadweight Loss, Demand Curve, Opportunity Cost

• School: University of Ottawa
• Department: Economics
• Course: ECO 1104
• Professor: David Gray

Document Summary

People hiding within the government, and their benefit should be taken into consideration as well. That"s why the tax should be considered into the tr. Deadweight loss = net loss in total surplus after the tax has been implemented. The net effect total surplus is always negative, as the gains realized by the government are outweighed by the losses of both demanders and suppliers. Lower equilibrium quantity (a shrink in market size) In chapter 7, it was shown that the free market equilibrium q was efficient, but now we are producing at a lower quantity. In other words, taxes choke off private sector activity that would otherwise occur. Currently the republican party in the usa is singing this hymn of job- killing taxes are wicked from the rooftops. This is not an argument against taxation, because taxes are required in order to finance government services. (but tax revenue is not infinite)