Chapter 7 & 8

buyers, sellers, & the government

A tax affects _________

raises the price buyers oay and lowers the price sellers receive

A tax on a good ______

buyers and sellers will share the burden of the tax

It does not matter whether a tax is levied on the buyers or the sellers of a good because _____________

producer surplus

Price - WTS =

consumer surplus

WTP - Price =

consumer surplus producer surplus tax revenue deadweight loss

Which tools help us evaluate hoe taxes affect economic well-being?

tax revenue

amount of tax x amount of good sold =

producer surplus

amount that producers benefit by selling a product at a market price that is higher than the least they would be willing to sell for

total surplus

consumer surplus + producer surplus + tax revenue =

tax revenue

how is a government's benefit from a tax measured?

consumer surplus

monetary gain obtained by consumers when the price that they pay is less than what they're willing to pay

-transfer resources from market participants to the government -alter incentives -distort market outcomes

taxes are costly to market participants because they

tax revenue

the money a government gains from the collection of taxes

total surplus decreases

what happens to the total surplus in a market when the government imposes a tax?

regardless of how the tax is levied

when a tax is levied on a good, the buyers and sellers of the good share the burden, ___________

loses some of the benefits of market efficiency

when teh government imposes taxes on the buyers or sellers of a good, society ________