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    microeconomics

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    Slide 4

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    microeconomics

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    microeconomics

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    2 views8 pages

    Slide 4

    Uploaded by

    dattran.31241026344
    microeconomics

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 8

    Applications: Tax and Trade

    Hoang-Anh Ho

    UEH

    Principles of Microeconomics
    Autumn 2024
    Tax
    Deadweight loss

    Consumer surplus:

    A − (A + B + C) = −(B + C)

    Producer surplus:

    F − (D + E + F) = −(D + E)

    Tax revenue:

    B + D − 0 = (B + D)

    Total surplus:

    − (C + E): deadweight loss


    Tax
    Elasticity and deadweight loss
    Tax
    Laffer curve
    Trade
    Is trade across countries good?

    Consumer surplus:

    A − (A + B) = −B

    Producer surplus:

    (B + D + C) − C = B + D

    Total surplus: D
    Trade
    Is trade across countries good?

    Consumer surplus:

    (A + B + D) − A = B + D

    Producer surplus:

    C − (B + C) = −B

    Total surplus: D
    Trade
    Is trade across countries good?

    Consumer surplus:

    −(C + D + E + F)

    Producer surplus:

    (C + G) − G = C

    Tax revenue: E

    Total surplus:

    − (D + F): deadweight loss, why?


    Trade
    Is trade across countries good?

    Other benefits
    • Increased variety of goods
    • Lower costs through economies of scale
    • Increased competition
    • Enhanced flow of ideas

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