税收-上海杉达学院.PPT

* The government makes sellers pay a $1.50 on each pizza they sell. The new, red supply curve reflects sellers’ supply as a function of the after-tax price. * NOTE: On this and subsequent slides, “PB” denotes the price buyers pay and “PS” denotes the price sellers receive. (The Chapter 8 PowerPoint uses the same notation for the welfare analysis of taxes.) The government makes buyers pay a $1.50 on each pizza they purchase. The new demand curve (in red, labeled D2) reflects buyers’ demand as a function of the after-tax price. The original demand curve (D1) still reflects buyers’ demand as a function of the total price – inclusive of the tax. Thus, buyers’ demand hasn’t really changed: at each quantity, the height of the original (blue) D curve is still the maximum that buyers will pay for that quantity, while the height of the new (red) D curve is the maximum that buyers will pay sellers for that quantity, given that buyers also must pay the tax. At any Q, the vertical distance between the blue and red D curves equals the tax. (If this were a percentage tax rather than a per-unit tax, the new D curve would not be parallel to the old one, it would be flatter: a tax of a given percentage would be a larger dollar amount at high prices than at low prices, so the downward shift would be greater in absolute terms when P is high than when it is low. This is the type of complexity we avoid by working with per-unit taxes.) * * “Market participants” simply means buyers and sellers. * * Whether the government makes buyers or sellers pay the tax, all of the effects are the same: - the price buyers pay rises (in this case to $11) - the price sellers receive falls (to $9.50) - the equilibrium quantity falls (to 450) - the incidence of the tax is the same (here, buyers pay $1 of the tax, while sellers pay $.50 of the tax on each unit) This should make sense if students think it through: A tax on buyers means buyers will have to pay more, which cau