Taxes in Supply and Demand
Tax Structures
Consumer Surplus
Producer Surplus
Optional
100
Gasoline taxes and cigarette taxes are examples of this type of per-unit tax.
What are excise taxes?
100
The tax base of this specific tax is income.
What is the income tax?
100
This will be the outcome if the current price is below a consumer's willingness to pay.
What is a purchase is made?
100
In a society with many suppliers, the willingness to accept of each supplier combines to form this curve.
What is the supply curve?
100
If a seller has a willingness to accept of $6 and the market price is $10, then this represents the producer surplus.
What is $4?
200
The area defined by the difference between the price a consumer pays and the seller receives times the quantity sold is defined as this.
What are tax revenues?
200
This type of tax structure requires individuals to pay the same tax rate regardless of their tax base.
What is a proportional tax?
200
In a society with many consumers, the WTP of each consumer combines to form this curve.
What is the demand curve?
200
This defines the lowest price at which a seller is willing to sell based on the costs of production.
What is willingness to accept (WTA)?
200
The idea that those with greater ability to pay a tax should pay more is known as this principle of tax fairness.
What is the ability-to-pay principle?
300
This is a term referring to who actually bears the burden of a tax.
What is tax incidence?
300
The idea that those who benefit from public spending should bear the burden of the tax that pays for that spending is known as this principle of tax fairness.
What is the benefits principle?
300
This defines the maximum price at which a potential buyer would buy a good or service.
What is willingness to pay (WTP!)?
300
Producer surplus sees this change when the market price increases.
What is an increase?
300
The area below the demand curve but above the current market price could be called this.
What is consumer surplus?
400
Suppose the market price in a market without taxes is $3. After taxes are imposed in this market, consumers end up paying $3.50 and sellers receive $2.75. The per-unit tax imposed in this market is equal to this value.
What is $0.75?
400
The measure or value that determines how much tax an individual or firm pays is known by this term.
What is tax base?
400
This defines the net gain a buyer achieves from the purchase of a good or service.
What is consumer surplus?
400
Suppose that Firm A has a willingness to accept of $2, Firm B has a willingness to accept of $4 and Firm C has a willingness to accept of $15 in the market for America Online Internet Subscriptions. If the current market price is $5, then this would be the quantity supplied in the market.
What are two subscriptions?
400
The imposition of taxes prevents mutually beneficial transactions from taking place, causing this specific type of inefficiency.
What is deadweight loss?
500
If the supply curve is relatively more inelastic than the demand curve, then the burden of a tax falls on this group.
Who are suppliers?
500
This is the name for a tax where high-income taxpayers pay a larger percentage of their income than low-income tax payers.
What is a progressive tax?
500
Suppose Aleisha has a WTP of $59, Brad has a WTP of $45, Claudia has a WTP of $35, Darren has a WTP of $25 and Edwina has a WTP of $10 for Beanie Babies. This is the quantity demanded for Beanie Babies if the current market price is $24.
What are four Beanie Babies?
500
Graphically, the producer surplus is defined by this area.
What is the area above the supply curve, but below the market price?
500
The fact that the market outcome allocates consumption and sales to those consumers and firms with the highest value implies that this outcome is this.
What is efficient?
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