Lecture 8
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The document analyzes the effects of a tax on sellers. It shows the supply and demand curves shifting as a result of a 40 SAR tax on sellers. This results in deadweight loss for both buyers and sellers, as buyers lose areas B and C while sellers lose areas D and E. The government gains the tax amount of areas B and D. In total, buyers and sellers are worse off by the deadweight loss areas C and E, while the government gains tax revenue of areas B and D.
Lecture 8
- 1. Tax Analysis 100 Supply with no tax 90 80 70 60 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
- 2. Tax Analysis 100 Supply with no tax 90 80 Buyer Surplus 70 60 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
- 3. Tax Analysis 100 Supply with no tax 90 80 Buyer Surplus 70 60 50 40 Seller Surplus 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
- 4. Tax Analysis 100 Supply with no tax 90 80 70 60 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 5. Tax Analysis 100 Supply with no tax 90 80 70 60 Tax of 40 SAR 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 6. Tax Analysis 100 Supply with no tax 90 40 80 70 60 40 50 Tax of 40 SAR 40 30 40 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 7. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax 40 80 70 60 40 50 Tax of 40 SAR 40 30 40 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 8. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax 80 70 60 Tax of 40 SAR 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 9. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax 80 70 60 Tax of 40 SAR 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 10. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax 80 70 60 Tax of 40 SAR 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 11. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax 80 70 60 Tax of 40 SAR 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 12. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax 80 70 60 Tax of 40 SAR 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 13. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax 80 70 60 Tax of 40 SAR 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 14. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax 80 70 60 Tax of 40 SAR 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 15. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax 80 70 60 Tax of 40 SAR 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 16. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax A 80 70 60 Tax of 40 SAR 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 17. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax A 80 70 B 60 Tax of 40 SAR 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 18. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax A 80 70 B 60 C Tax of 40 SAR 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 19. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax A 80 70 B 60 C Tax of 40 SAR 50 D 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 20. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax A 80 70 B 60 C Tax of 40 SAR 50 E D 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 21. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax A 80 70 B 60 C Tax of 40 SAR 50 E D 40 30 20 F 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 22. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax A 80 70 B 60 C Tax of 40 SAR 50 E D 40 30 20 F 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 23. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax A 80 70 B 60 C Tax of 40 SAR 50 E D 40 30 20 F 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 24. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax A 80 70 B 60 C Tax of 40 SAR 50 E D 40 30 20 F 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 25. Tax Analysis 100 Supply with 40 SAR tax 90 Supply with no tax A 80 70 B 60 C Taxes 50 E D 40 Tax of 40 SAR 30 20 F 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 26. Tax Analysis 100 Supply with 40 SAR tax 90 Buyers Lose C to deadweight loss and lose B to taxes Supply with no tax A 80 70 B 60 C Taxes 50 E D 40 Tax of 40 SAR 30 20 F 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 27. Tax Analysis 100 Supply with 40 SAR tax 90 Buyers Lose C to deadweight loss and lose B to taxes Supply with no tax A 80 Sellers Lose E to deadweight loss and lose D to taxes 70 B 60 C Taxes 50 E D 40 Tax of 40 SAR 30 20 F 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 28. Tax Analysis 100 Supply with 40 SAR tax 90 Buyers Lose C to deadweight loss and lose B to taxes Supply with no tax A 80 Sellers Lose E to deadweight loss and lose D to taxes 70 B 60 C Taxes 50 E D 40 Tax of 40 SAR Government gains B from buyers and D from sellers 30 20 F 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax
- 29. Tax Analysis 100 Supply with 40 SAR tax 90 Buyers Lose C to deadweight loss and lose B to taxes Supply with no tax A 80 70 B 60 Buyers C Sellers Taxes Tax of 40 SAR Total 30 20 0 250 After E D 40 D, E F 125 A 45 F 45 B&D 120 210 Change Taxes 50 A, B, C 125 Lose C 20 Lose B 60 Lose E 20 Lose D 60 Gain B 60 Gain D 60 40 Before Sellers Lose E to deadweight loss and lose D to taxes Government gains B from buyers and D from sellers F 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10 Tax on Seller with shift Supply curve up by the amount of the tax