The Effects of a Per Unit Tax - Inelastic Demand
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- Опубликовано: 12 сен 2024
- This video lesson explains how a specific excise tax will affect the equilibrium price and quantity in the market for cigarettes. We will also explain how the tax burden is shared by both producers and consumers, and the portion of the tax born by consumers depends on the elasticity of demand for the product.
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@Suburbiton A $2 tax that increase the price from $5 to $6 is being shared by the producer and the consumer. Consumers are paying $1 of the $2 tax, producers are paying the other $1. So, essentially, although a consumer would pay $6, the seller only gets to keep $4 of that, and pay $2 to the government as a tax.
If there were videos as good as yours for every subject,there would be no need to go to school.
This is a good distinction between an excise tax and an ad valorem tax. I think it helps students to learn these concepts better when there are visual presentations included such as this video.
Good spot, thanks for the heads up, I've added a not pointing this out...
This video was particularly helpful when explaining the elasticity of demand.
Quick question: If I was given both a Demand and Supply function instead of arbitrary numbers, how exactly would I calculate the new Pb and Ps and Q if the burden wasn't equal?
I know at 5:19, you pointed out that Pb is about $1.20, but how exactly would I calculate it?
Thanks!
Clutch King 👑🙌
Quick Question? Maybe even Jason can answer this question but what program does he seem to be using in these videos it is something i would love to have as part of my classroom being able to draw these on the smart tv. and be able to type up info as i need it
very helpful mate,thanks
What effect do these types of taxes have on total welfare of those in the market of the good or service that is taxed?
What software did you use to make this? I'd also like to make video lectures. Good job.
Its one-note if you still haven't figured it out 8 years later
Can anyone provide me a rational explanation for the following question or on what perspective this should be answered.
Why will government raise more tax revenue if it applies a tax to a good with inelastic demand than if it applies the tax to a good with elastic demand?
Is it because of comparatively smaller dead weight loss, or what?
This video and the one after it should make the answer to your question pretty clear...
Sir, i got everything about the allocation of tax burdens among the producers and consumers on different types of demand and supply curves.
But i didn't get why the TAX REVENUE will be greater for inelastic curves than elastic curves, provided other factors are constant. :(
It's not there in the tutorial video.
Sir, is it because dead weight loss is comparatively less in inelastic curves?
+Dipanjan Shaha for the same reason there is a small deadweight loss the revenue will be greater. Taxing an inelastic good leads to a much smaller decrease in consumption compared to an elastic good, therefore consumption and spending will remain high, raising more revenue than if consumption were to fall by relatively more.
OHH..Now it makes sense. Thanks a lot Mr. Jason. It really helped. :)
is cigarette in oligopoly market? if so, there should be no supply curve? in that case, how to draw the excise tax curve? confused
My book did a terrible damn job explaining this, thanks a lot for the video.
While the demand is relatively inelastic compared with the supply curve in this particular case, it doesn't look very inelastic as a whole to me.
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4:10 price of cigarettes does not increase by full $2 tax
Excuse me, although you are using the correct terms for net welfare, I would argue that cigarettes have such an enormous negative externality of consumption that although producers are worse off, society is better off. There are less smokers, and society enjoys the dead-weight loss of all the packs of cigarettes not produced, decreasing littering, secondhand smoke, etc. Consumers are also better off, since they are smoking less. The "enjoyment" you describe is their own damnation.