module 4 Flashcards
welfare economics
utilizes microeconomics to assess societal well-being
consumer surplus
net gain to a buyer when price of a good is less than their willingness-to-pay
willingness-to-pay
maximum amount a buyer will pay for a good
willingness-to-sell
minimum price a seller will accept for their product
producer surplus
net benefit they receive from selling their product
total surplus
measures efficiency of market – at market equilibrium, total surplus is maximized
negative tax
government subsidizing and helping the low income
tax analysis
helps direct government towards implementing taxes to where it would lead to the least societal cost
unit taxes
tax involving a specific price amount per unit sold
incidence of tax
how the burden of tax is shared among market participants
when is supply more elastic than demand
when sellers are more flexible than buyers
when is demand more elastic than supply
when buyers are more flexible than sellers
who bears more of the tax burden
whichever side is more inelastic will bear a larger portion of the tax
