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The Effects of a Per Unit Tax - Inelastic Demand
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Күн бұрынThis video lesson explains how a specific excise tax will affect the equilibrium price and quantity in the market for cigarettes. We will also explain how the tax burden is shared by both producers and consumers, and the portion of the tax born by consumers depends on the elasticity of demand for the product.
Want to learn more about economics, or just be ready for an upcoming quiz, test or end of year exam? Jason Welker is available for tutoring, IB internal assessment and extended essay support, and other services to support economics students and teachers. Learn more here! econclassroom.c...
@jamesellis4020 11 жыл бұрын
If there were videos as good as yours for every subject,there would be no need to go to school.
@InstTaxSolutionsLLC 11 жыл бұрын
This is a good distinction between an excise tax and an ad valorem tax. I think it helps students to learn these concepts better when there are visual presentations included such as this video.
@JasonWelker 12 жыл бұрын
@Suburbiton A $2 tax that increase the price from $5 to $6 is being shared by the producer and the consumer. Consumers are paying $1 of the $2 tax, producers are paying the other $1. So, essentially, although a consumer would pay $6, the seller only gets to keep $4 of that, and pay $2 to the government as a tax.
@InstTaxSolutionsLLC 10 жыл бұрын
This video was particularly helpful when explaining the elasticity of demand.
@JasonWelker 12 жыл бұрын
Good spot, thanks for the heads up, I've added a not pointing this out...
@tomicalvopaz2916 2 жыл бұрын
Clutch King 👑🙌
@connormcfall 9 жыл бұрын
Quick question: If I was given both a Demand and Supply function instead of arbitrary numbers, how exactly would I calculate the new Pb and Ps and Q if the burden wasn't equal? I know at 5:19, you pointed out that Pb is about $1.20, but how exactly would I calculate it? Thanks!
@masterhogan1 12 жыл бұрын
My book did a terrible damn job explaining this, thanks a lot for the video.
@mahirmulasmajic9968 7 жыл бұрын
Quick Question? Maybe even Jason can answer this question but what program does he seem to be using in these videos it is something i would love to have as part of my classroom being able to draw these on the smart tv. and be able to type up info as i need it
@nobody522 2 жыл бұрын
What effect do these types of taxes have on total welfare of those in the market of the good or service that is taxed?
@kindlygreatvalue3716 11 жыл бұрын
very helpful mate,thanks
@dipanjansaha7931 8 жыл бұрын
Can anyone provide me a rational explanation for the following question or on what perspective this should be answered. Why will government raise more tax revenue if it applies a tax to a good with inelastic demand than if it applies the tax to a good with elastic demand? Is it because of comparatively smaller dead weight loss, or what?
@JasonWelker 8 жыл бұрын
This video and the one after it should make the answer to your question pretty clear...
@dipanjansaha7931 8 жыл бұрын
Sir, i got everything about the allocation of tax burdens among the producers and consumers on different types of demand and supply curves. But i didn't get why the TAX REVENUE will be greater for inelastic curves than elastic curves, provided other factors are constant. :( It's not there in the tutorial video. Sir, is it because dead weight loss is comparatively less in inelastic curves?
@JasonWelker 8 жыл бұрын
+Dipanjan Shaha for the same reason there is a small deadweight loss the revenue will be greater. Taxing an inelastic good leads to a much smaller decrease in consumption compared to an elastic good, therefore consumption and spending will remain high, raising more revenue than if consumption were to fall by relatively more.
@dipanjansaha7931 8 жыл бұрын
OHH..Now it makes sense. Thanks a lot Mr. Jason. It really helped. :)
@kangzhengxia9093 6 жыл бұрын
is cigarette in oligopoly market? if so, there should be no supply curve? in that case, how to draw the excise tax curve? confused
@alex_zetsu 6 жыл бұрын
While the demand is relatively inelastic compared with the supply curve in this particular case, it doesn't look very inelastic as a whole to me.
@MrOpeninnovation 12 жыл бұрын
What software did you use to make this? I'd also like to make video lectures. Good job.
@shockwave2477 3 жыл бұрын
Its one-note if you still haven't figured it out 8 years later
@tdofeldt5742 3 жыл бұрын
4:10 price of cigarettes does not increase by full $2 tax
@Taric25 10 жыл бұрын
Excuse me, although you are using the correct terms for net welfare, I would argue that cigarettes have such an enormous negative externality of consumption that although producers are worse off, society is better off. There are less smokers, and society enjoys the dead-weight loss of all the packs of cigarettes not produced, decreasing littering, secondhand smoke, etc. Consumers are also better off, since they are smoking less. The "enjoyment" you describe is their own damnation.
@tomicalvopaz2916 2 жыл бұрын
🐐
Economicsfun
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