MICRO 2 p4 government tax (1) được đánh số

1 MICROECONOMICS • • • • • • • Basic economic concepts Suply, Demand and Market equilibrium Suply, Demand and Government Policies Elasticity International trade Production and Cost Market structures SUPPLY, DEMAND & GOVERNMENT POLICIES • Consumer’s surplus and Producer’s surpus • Price Control: Price Ceiling and Price Floor • Market based policies: Tax Look for the answers to these questions: • How do taxes affect market outcomes? How do the effects depend on whether the tax is imposed on buyers or sellers? • What is the incidence of a tax? What determines the incidence? • How does a tax affect consumer surplus, producer surplus, and total surplus? • What is the deadweight loss of a tax? • What factors determine the size of this deadweight loss? • How does tax revenue depend on the size of the tax? 4 Taxes • Government uses taxes • To raise revenue for public projects • Roads, schools, and national defense • Tax incidence • Manner in which the burden of a tax is shared among participants in a market • The government can make the seller or the buyer to pay the tax A Tax on Sellers Effects of a $1.50 per unit tax on sellers $11.50 P The tax effectively raises sellers’ costs by $1.50 per pizza S2 Tax S1 Sellers will supply 500 pizzas only if P rises to $11.50, to compensate for this cost increase Hence, a tax on sellers shifts the S curve up by the amount of the tax $10.00 D1 500 Q 6 A Tax on Sellers Effects of a $1.50 per unit tax on sellers P PB = $11.00 • • • • • S2 Tax S1 $10.00 PS = $9.50 New equilibrium: Q = 450 Buyers pay PB = $11.00 Sellers receive PS = $9.50 Difference between them = $1.50 = tax D1 450 500 Q A Tax on Buyers Effects of a $1.50 per unit tax on buyers • Hence, a tax on buyers shifts the D curve down by the amount of the tax P S1 $10.00 Tax $8.50 D1 D2 500 • The price buyers pay is now $1.50 higher than the market price P • P would have to fall by $1.50 to make buyers willing to buy same Q as before • E.g., if P falls from $10.00 to $8.50, Q buyers are still willing to purchase 500 pizzas 8 A Tax on Buyers Effects of a $1.50 per unit tax on buyers P PB = $11.00 Tax S1 $10.00 PS = $9.50 • • • • • how the burden of a tax is shared among market participants D1 D2 450 500 New equilibrium: Q = 450 Sellers receive PS = $9.50 Buyers pay PB = $11.00 Difference between them = $1.50 = tax Q 9 The Outcome Is the Same in Both Cases! • The effects on P and Q, and the tax incidence are the same whether the tax is imposed on buyers or sellers! P PB = $11.00 A tax drives a wedge between the price buyers pay and the price sellers receive Tax S1 $10.00 PS = $9.50 D1 450 500 Q 10 a b c d a b c d When a tax is placed on the sellers of a product, buyers pay more, and sellers receive more than they did before the tax more, and sellers receive less than they did before the tax less, and sellers receive more than they did before the tax less, and sellers receive less than they did before the tax Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle Which of the following statements is correct? The effective price received by sellers is $0.40 per bottle less than it was before the tax Sixty percent of the burden of the tax falls on sellers This tax causes the demand curve for perfume to shift downward by $1.00 at each quantity of perfume All of the above are correct a b c d a b c d A tax levied on the sellers of blueberries increases sellers’ costs, reduces profits, and shifts the supply curve up increases sellers’ costs, reduces profits, and shifts the supply curve down decreases sellers’ costs, increases profits, and shifts the supply curve up decreases sellers’ costs, increases profits, and shifts the supply curve down When a tax is placed on the sellers of cell phones, the size of the cell phone market and the effective price received by sellers both increase increases, but the effective price received by sellers decreases decreases, but the effective price received by sellers increases and the effective price received by sellers both decrease 11 Tax incidence: who bear the tax burden P P St S St S D D Q Q 12 Elasticity and Tax Incidence CASE 1: Supply is more elastic than demand It’s easier for sellers than buyers to leave the market S So buyers bear most of the burden of the tax P Buyers’ share of tax burden PB Tax Price if no tax Sellers’ share of tax burden PS D Q 13 Elasticity and Tax Incidence CASE 2: Demand is more elastic than supply P Buyers’ share of tax burden PB Price if no tax Sellers’ share of tax burden S Tax PS • It’s easier for buyers than sellers to leave the market • Sellers bear most of the burden of the tax D Q 14 Items Market The Effects of a Tax Tax Quantity P Buyer’s price Seller’s price Consumer’s surplus Producer’s surplus Dead weight loss A PB P* S B C D E PS D F Tax Total surplus QT QE Q 15 a b c When a tax is placed on the buyers of lemonade, the sellers bear the entire burden of the tax buyers bear the entire burden of the tax burden of the tax will be always be equally divided between the buyers and the sellers d burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal a b c d a b c d a b c d a b c d The per-unit burden of the tax on buyers is $6 $8 $14 $24 The per-unit burden of the tax on sellers is $6 $8 $10 $14 The tax revenue is $210 $420 $980 $1680 The Dead weight loss of the tax is $420 $210 $510 $980 16 Effects of a tax The market for hotel rooms is in equilibrium as in the graph • Suppose the government imposes a tax on buyers of $30 per room • Find the new Q, PB, PS, and incidence of tax P 140 130 The market for hotel rooms S 120 110 100 90 80 D 70 60 50 40 Q 50 60 70 80 90 100 110 120 130 17 Items Quantity Buyer’s price Seller’s price Consumer’s surplus Producer’s surplus Dead weight loss Market Tax P 140 The market for hotel rooms 130 S 120 PB = 110 100 90 PS = 80 Tax D 70 60 50 Tax Total surplus 18 40 Q 50 60 70 80 90 100 110 120 130 18 Supply, demand and Government policy Given market demand and supply as follows: Qd = 180–P, Qs = P a Government imposes tax on the sellers, new supply curve is Qs = P – T Find the new market equilibrium, seller price, buyer price, tax revenue, dead weight loss by T b If T = 40, find the new equilibrium price and quantity, consumer’s surplus, producer’s surplus, total surplus, tax revenue, dead weight loss (if any) before and after tax c Find the tax burden for the parties d If government wants to maximize tax revenue, what is T? 19 Supply, demand and Government policy Given market demand and supply as follows: Qd = 180–P, Qs = P a Government imposes tax on the sellers, new supply curve is Qs = P – T Find the new market equilibrium, seller price, buyer price, tax revenue, dead weight loss by T • Demand Qd = 180–P, Equilibrium 180 – P = P – T • Supply Qs = P - T "#$%& • Buyer price: 𝑃! = Replace P to demand • Quantity: 𝑄𝑡 = • Seller price: 𝑃) = ' "#$(& B ' "#$(& Replace QT to supply ' 20 Supply, demand and Government policy • Demand Qd = 180–P, • Supply: Qs=P • Supply with tax Qs = P - T Equilibrium 180 – P = P – T • Buyer price: 𝑃! = "#$%& ' Replace PB to demand • Quantity: 𝑄𝑡 = "#$(& ' Replace QT to supply • Seller price: 𝑃) = "#$(& ' 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 21 Supply, demand and Government policy • Demand Qd = 180–P • Supply Qs = P • T=40 • Buyer price? • Seller price? • Quanity? 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 110 70 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 22 10 As the figure is drawn, who sends the tax payment to the government? a The buyers send the tax payment b The sellers send the tax payment c A portion of the tax payment is sent by the buyers, and the remaining portion is sent by the sellers d The question of who sends the tax payment cannot be determined from the graph 11 Buyers pay how much of the tax per unit? a $0.50 b $1.50 c $3.00 d $5.00 12 How much tax revenue does this tax generate for the government? a $80 b $60 c $15 d $45 23 ... the tax P Buyers’ share of tax burden PB Tax Price if no tax Sellers’ share of tax burden PS D Q 13 Elasticity and Tax Incidence CASE 2: Demand is more elastic than supply P Buyers’ share of tax. .. The per-unit burden of the tax on sellers is $6 $8 $10 $14 The tax revenue is $21 0 $ 420 $980 $1680 The Dead weight loss of the tax is $ 420 $21 0 $510 $980 16 Effects of a tax The market for hotel... 140 130 120 110 100 90 80 70 60 50 40 30 20 10 110 70 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 22 10 As the figure is drawn, who sends the tax payment to the government?