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Log in to EconEdLink Log in to EconEdLink Webinars are free to attend or watch! To register log in to your EconEdLink account, or sign up for free. Nearpod version available Time: 180 mins, Updated: March 24 2021,
ObjectiveStudents will be able to:
StandardsConcepts
In this personal finance lesson, students will learn how to determine the function values of simple functions. Resources
ProcedureA government may tax a good or service in order to generate revenue. This will result in smaller producer and consumer surpluses and in dead weight loss. The tax burden is carried by the producer and consumer and can be calculated using different areas on the supply-demand graph for the good or service. Mathematical straight line functions are used to calculate the corresponding price(s), (the y-value), asked and/or paid for a given quantity of a product, (the x-value). Equations to calculate the areas of rectangles and triangles are used to calculate different areas on the supply-demand graph.
[Answers may vary if a different equation and/or different values of x are used.]
a. f(x) = 2/3(x) – 4 if x = 9 = 2/3(9) – 4 = 6 -4 = 2 b. 3y – 8x = 10 if x = – 2 3y – 8( -2) = 10 3y + 16 = 10 3y = 10 -16 y = -6/3 = – 2
Area of a Square: | X | Area of a Rectangle: L X w Area of a Triangle: (1/2)b + h Area of a Circle: A=π(r)2; r is the radius
1. Area L X w = 4 x 2.5 = 10 2. Area =(1/2)b x h = ½ x 12 x 6 = 36
1. P = 5 – 2Q P = 5- 2(1) P = 3$ P = 5 – 2Q 0.5$ = 5 – 2Q 0.5 – 5 = -2Q -4.5÷ -2 = Q Q = 2.25 glasses 2. P = 2 + 1.5 Q 10 = 2 + 1.5 Q (10-2) ÷1.5 = Q Q = 5.3 burgers P = 2 + 1.5 Q 12 = 2 + 1.5 Q (12-2)÷1.5 = Q Q = 6.6 burgers
A. In this case, the consumer will bear a larger part of the tax burden. B. In this case, the consumer will bear a larger part of the tax burden. C. In this case, the consumer will bear a larger part of the tax burden.
AssessmentMultiple Choice
Constructed Response You are the newly appointed Head Economist of Super Health Food Industries. Your first task is to evaluate the present situation regarding the supply and demand of one of the company’s most popular products: The X-Factor Apple Sauce. Presently the price is $3 per bottle of 330 ml and five million bottles are sold per month.
Price will rise, quantity exchanged with fall.
Answer: producer tax burden: 2 million bottles x $1 = $2 million. ½ x (1 million) x $1 = $1/2 million. The producers’ incidence of this tax is $1 per bottle. Consumer tax burden: 2 million bottles x $2 = $4 million. ½ x (1 million) x$2 = $1 million. Consumers’ incidence of this tax is $2 per bottle. The consumers effectively pay $2 of this tax and the producers effectively pay $1 of the tax per bottle. Dead weight loss: ½ x $3 x 1 million bottles: $ 1 ½ million. Related Resources
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Sign Up for Free MembershipSave resources, get recommended lessons, and exclusive content. Sign up In which condition more tax burden is on consumer?If demand is more inelastic than supply, consumers bear most of the tax burden.
Under which circumstances does the tax burden fall entirely on consumers?When supply is more elastic than demand, the tax burden falls on the buyers. If demand is more elastic than supply, producers will bear the cost of the tax.
On which side of the market does a tax burden fall most heavily?A tax burden is distributed independently of relative elasticities of supply and demand. A tax burden falls most heavily on the side of the market that is closer to unit elastic.
What causes excess burden of tax?The excess burden of taxation is the efficiency cost, or deadweight loss, associated with taxation. The total economic burden of a tax includes both payments that taxpayers make to the government and any lost economic value from inefficient activities undertaken in reaction to taxes.
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