ECON 2030 Chapter : Menu 18 Jun 14
Document Summary
Today"s menu: wednesday 18 june 2014: business, practice problems, chapter 7: 1-3, 6-12, 14, 18. Substance: incidence of taxation, motivation, tools, elasticity, economic surplus (es = benefit (minus) cost) from the perspective of the buyer= the net benefit to the society of the economic transaction. Es = ben cost = cs + ps + government revenue. In the most basic economic transaction we have the buyer and the seller. Surplus = something extra that results from an economic activity. Markets the activity of buying and selling. benefit cost: consumer surplus (cs) = extra that the buyer is getting . Ps = actual price reservation price: government revenue = $ that accrue to the government from the economic activity. What the government is getting from the tax. The elasticity is going to determine precisely what burden will be applied to the buyer and seller. = (reservation price buyer actual price) + (actual price reservation.