Chapter 8- Application: The Costs of Taxation Flashcards Preview

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Flashcards in Chapter 8- Application: The Costs of Taxation Deck (13)
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1
Q

When a tax is levied on buyers the demand curve shifts…

A

Downward by the size of the tax

2
Q

When a tax is levied on the sellers the demand curve shifts…

A

Upward by the size of the tax

3
Q

Tax places a wedge between the price buyers pay and…

A

the price sellers recieve

4
Q

A tax on a good causes the size for the good to…

A

shrink

5
Q

The government receives a total tax revenue of..

A

T (size of the tax) * Q (quantity)

6
Q

Deadweight Loss

A

the fall in total surplus that results form a market distortion, such as a tax

7
Q

Deadweight loss revisited

A

it is a loss to buyers and sellers in a market that is not offset by an increase in government revenue

8
Q

The elasticity of supply affects the size of…

A

deadweight loss

9
Q

A tax is considered a deadweight loss because…

A

It induces buyers and sellers to change their behaviors

10
Q

The greater the elasticitiesof supply and demand…

A

the greater the deadweight loss of a tax

11
Q

Taxes usually change over…

A

time

12
Q

Supply-side economics

A

the belief that having lower taxes encourages people to work more and harder within the economy which then will increase the overall economy

13
Q

Review lecture slide for details

A

it will be helpful