The following graph represents the demand and supply for an imaginary good called a pinckney. The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario.
2. Taxes and welfare
Consider the market for commercial fans. The following graph shows the demand and supply for commercial fans before the government imposes any taxes.
3. Relationship between tax revenues, deadweight loss, and demandelasticity
The government is considering levying a tax of $60 per unit on suppliers of either concert tickets or bus passes. The supply curve for each of these two goods is identical, as you can see on each of the
4. The Laffer curve
Governments often place so-called sin taxes on goods or services such as cigarettes, alcohol, and pornography. These kinds of taxes are popular with politicians because they are usually more
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