lectures in macroeconomics- charles w. upton taxes and efficiency losses- a proof
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Lectures in Macroeconomics- Charles W. Upton
Taxes and Efficiency Losses- A Proof
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EL
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Taxes and Efficiency Losses- A Proof
Two Propositions
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Taxes and Efficiency Losses- A Proof
Two Propositions
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Taxes and Efficiency Losses- A Proof
The General Efficiency Loss
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Taxes and Efficiency Losses- A Proof
The General Efficiency Loss
• Now suppose we impose a tax on the product, so the quantity sold drops.
• The efficiency loss is, of course, the shaded area.
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D
Po
Qo
Taxes and Efficiency Losses- A Proof
The General Efficiency Loss
• The EL is
½BH
S
D
Po
Qo
Taxes and Efficiency Losses- A Proof
The General Efficiency Loss
• The EL is
½BH
B = τPo
H= µB = µ τPo
EL = (½) µ τ2Po2
S
D
Po
Qo
τPo
Taxes and Efficiency Losses- A Proof
The General Efficiency Loss
• The EL is
½BH
B = τPo
H= µB = µ τPo
S
D
Po
Qo
τPo
Taxes and Efficiency Losses- A Proof
The General Efficiency Loss
• The EL is
½BH
B = τPo
H= µB = µ τPo
EL = (½) µ τ2Po2
S
D
Po
Qo
τPo
Taxes and Efficiency Losses- A Proof
The General Efficiency Loss
• The EL is
½BH
B = τPo
H= µB = µ τPo
EL = (½) µ τ2Po2
S
D
Po
Qo
τPo 2~ BBEL
Taxes and Efficiency Losses- A Proof
The General Efficiency Loss
• The EL is
½BH
B = τPo
H= µB = µ τPo
EL = (½) µ τ2Po2
S
D
Po
Qo
τPo 2~ BBEL
R τ= τ R1
Taxes and Efficiency Losses- A Proof
The Second Proposition
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Taxes and Efficiency Losses- A Proof
The Second Proposition
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Taxes and Efficiency Losses- A Proof
The Second Proposition
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Taxes and Efficiency Losses- A Proof
The Algebra
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Taxes and Efficiency Losses- A Proof
The Algebra
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Taxes and Efficiency Losses- A Proof
Optimization
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Taxes and Efficiency Losses- A Proof
Optimization
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Taxes and Efficiency Losses- A Proof
Optimization
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Taxes and Efficiency Losses- A Proof
Optimization
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Taxes and Efficiency Losses- A Proof
Optimization
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Taxes and Efficiency Losses- A Proof
Optimization
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Taxes and Efficiency Losses- A Proof
End
©2004 Charles W. Upton. All rights reserved