Lecture 4-2 Flashcards
1
Q
The economy is as “large” and efficient as possible. You assume that the market is perfectly competitive and there are no externalities.
A
First Welfare Theorem
2
Q
The producer and consumer equally bear this burden
A
Tax Burden
3
Q
The “difference” between what a consumer pays and producer receives
A
Tax Wedge
4
Q
“Reverse tax”
A
Subsidies
5
Q
Which “side of the tax bears the greater burden”
A
The more Inelastic side
6
Q
How policy affects the size of the “economic pie”
A
Welfare Analysis
7
Q
Tax revenue
A
Government surplus
8
Q
What happens to efficiency of a market, or the “size of the pies” in markets with taxes?
A
The social pie is pushed to be smaller
