ECON201-HW8
Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by K+L represents
tax revenue
Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by I+J+K represents
consumer surplus before the tax
The Laffer curve relates
the tax rate to tax revenue raised by the tax
Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. Total surplus before the tax is measured
I+J+K+L+M+Y
Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by I+Y represents the
deadweight loss due to the tax
Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The producer surplus after the tax is measured by the area
M
Economists generally agree that the most important tax in the U.S. economy is the
tax on labor
Labor taxes may distort labor markets greatly if
the number of hours many part-time workers want to work is very sensitive to the wage rate