[ECO 304K] - Final Exam Guide - Everything you need to know! (43 pages long)

• School: UT-Austin
• Department: Economics
• Course: ECO 304K
• Professor: Thomas Wiseman

Document Summary

Taxes: effects on p and q, deadweight loss. D: p = 1000-2qd s: p= 100+ qs. 1000-2q - (100 + q) = 300 -> q^t =200. Take supply curve, add the tax, set it equal to demand and down. Plug q = 200 into d to get p^b= 600. Plug q= 200 into s to get p^s = 300. P of buyer = up, p of seller = down p^b-p^s= 300= tax. Ps= c = x 200 x 200 = 20,000. Govt revenue= b= 200x 300 = 60,000 (units x tax) (direct burden) Cost of the tax that we don"t see. Higest anyone is willing to pay is 1000 lowest is 100 tax of 2000 noone will pay, tax revenue will be 0. The who pays the tax doesn"t depend on who pays the tax theorem: buyers; the same is true of p^s and of q^t.