How a Tax Works in a Market
A $3 per-unit tax on sellers shifts S up, creating a wedge between Pb and Ps
Tax Incidence: Who Pays?
Why inelastic side pays more
Calculating tax burden
Tax Revenue
Deadweight Loss (DWL)
The DWL triangle represents lost surplus from reduced trade (Q drops from 5 to 3.5)
Worked Example
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Elasticity and Deadweight Loss Size
Per-Unit Tax vs. Lump-Sum Tax
AP Exam Tips
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Common Mistakes
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Unit 2 topics
Unit 2 overview2.1Changes in Demand2.10Tax Incidence and Deadweight Loss2.11Price Controls: Ceilings and Floors2.12International Trade and Public Policy2.2Changes in Supply2.3Price Elasticity of Demand2.4Price Elasticity of Supply2.5Cross-Price Elasticity of Demand2.6Income Elasticity of Demand2.7Consumer Surplus2.8Producer Surplus2.9Market Equilibrium and Efficiency