# Taxes

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##### Intros
###### Lessons
1. Taxes Overview:
2. Tax Incidence
• The division of tax burden
• 3 Cases
3. Effects of Taxes
• Taxes on Sellers
• Conclusion
4. Tax Incidence and Elasticity of Demand & Supply
• Perfectly inelastic demand curve
• Perfectly elastic demand curve
• Perfectly inelastic supply curve
• Perfectly elastic supply curve
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##### Examples
###### Lessons
1. Understanding Effects of Taxes on Buyers and Sellers
You have the following information:
 Chocolate bars (dollars) Quantity demanded (thousands per day) Quantity Supplied (thousands per day) 1 6 4 2 5 5 3 4 6 4 3 7 5 2 8
1. If chocolate bars are not taxed, what is the price of a chocolate bars and how many are bought?
2. If sellers are taxed $2 dollar a chocolate bar, what is the price? How many are sold? Who pays the taxes? 3. If buyers are taxed$2 dollar a chocolate bar, what is the price? How many are bought? Who pays the taxes?
2. The demand function for laptops is P = 300 - 2Q, and the supply function is P = 100 + 3Q.
1. If laptops are not taxed, what is the price of a laptop and how many are bought?
2. If sellers are taxed $10 dollar a laptop, what is the price? How many are sold? Who pays the taxes? 3. If buyers are taxed$10 dollar a laptop, what is the price? How many are bought? Who pays the taxes?
3. Understanding Tax Incidence and Elasticity of Demand & Supply
Suppose the demand curve for candy is perfectly inelastic, and a tax is imposed.
1. Illustrate this in a graph.
2. Who pays the taxes?
4. The demand curve is perfectly elastic, and the supply curve is perfectly inelastic. Suppose the equilibrium price is $5, and the equilibrium quantity is 100. 1. Illustrate this in a graph. 2. What happens when a$1 tax is imposed? Who pays the taxes?