Calculates the surplus analysis for ad valorem taxes.
Author: shiroeExecutions: 386
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Please enter the constant terms and coefficients for the demand and supply functions. The format is
D = b + aP and S = f + cP. If the problem specifies the inverse demand or inverse supply function, please convert it to the standard form before entering the values.
For an ad valorem tax rate t of 8%, enter 0.08; for 10%, enter 0.1.
Assume the tax rate is between 0 and 1.
When calculating the price elasticity of demand, multiply by -1.
D = b + aP and S = f + cP. If the problem specifies the inverse demand or inverse supply function, please convert it to the standard form before entering the values.
For an ad valorem tax rate t of 8%, enter 0.08; for 10%, enter 0.1.
Assume the tax rate is between 0 and 1.
When calculating the price elasticity of demand, multiply by -1.
| Pre-tax Equilibrium Price | |
| Pre-tax Equilibrium Quantity | |
| Post-Tax Equilibrium Price | |
| Post-Tax Equilibrium Quantity | |
| Pre-tax consumer surplus | |
| Pre-tax Producer Surplus | |
| Pre-tax social surplus (total surplus) | |
| Post-Tax Consumer Surplus | |
| Post-Tax Producer Surplus | |
| Post-Tax Social Surplus (Total Surplus) | |
| Consumer Tax Burden | |
| Tax Burden on Producers | |
| Government Tax Revenue | |
| Price elasticity of demand at the pre-tax equilibrium point | |
| Price elasticity of supply at the pre-tax equilibrium point | |
| Elasticity Ratio | Supply/Demand |
| Tax Burden Ratio | Delete/Create |
| *Reference* Common Mistakes in Tax Revenue Calculations | This is an “incorrect calculation result” derived from the “Tax Revenue Calculations Prone to Errors” section. |
| Loss of Welfare (Deadweight Loss) |
R5 (2023). July 5 (Wed)_Surplus Analysis of Ad Valorem Tax_001
Revised_002.
Revised_002.
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Consider a problem in which the government imposes an ad valorem tax on a good in a perfectly competitive market. The tax is levied on firms, which are assumed to pass it on to consumers through prices.
Assume that the demand and supply functions are given by linear equations.
Since the tax burden on consumers and producers depends on the ratio of the price elasticity of demand to the price elasticity of supply at the pre-tax equilibrium point, the program also calculates and outputs the ratio of elasticities and the ratio of tax burdens for reference. The denominator for elasticity is demand, and for tax burden, it is the producer.
In addition, calculate and output results for government tax revenue based on “common calculation errors” for reference.