Economics Question (Microeconomics) [Ad valorem Tax and Changes in Surplus]
Author: shiroeExecutions: 196
※ This library was created by a member. This site is not responsible for its content.
Let the demand function be of the form D = b + aP.
Let the supply function be of the form S = f + cP.
Enter a nonzero positive number for b.
Enter a nonzero negative number for a.
Enter a non-zero negative number for f.
Enter a non-zero positive number for c.
Enter a non-zero positive number for the ad valorem tax t.
Let the supply function be of the form S = f + cP.
Enter a nonzero positive number for b.
Enter a nonzero negative number for a.
Enter a non-zero negative number for f.
Enter a non-zero positive number for c.
Enter a non-zero positive number for the ad valorem tax t.
| Constant term b in the demand function | Values adopted for the input |
| Demand function coefficient a | Values adopted for the input |
| Constant term f of the supply function | Values adopted for the input |
| Supply function coefficient c | Values adopted for the input |
| Pay-as-you-go tax t | Values adopted for the input |
| Pre-tax Equilibrium Price | |
| Pre-tax Equilibrium Quantity | |
| Pre-tax consumer surplus | |
| Pre-tax Producer Surplus | |
| Gross Surplus Before Taxes | |
| Post-Tax Equilibrium Price | |
| Post-Tax Equilibrium Quantity | |
| Post-Tax Consumer Surplus | |
| Post-Tax Producer Surplus | |
| Tax revenue | |
| Total Surplus After Taxes | Do not include tax revenue in the surplus |
| Total Surplus After Taxes (Including Tax Revenue) | |
| Dead load | (Loss of Welfare) |
| Changes in Consumer Surplus | |
| Changes in Producer Surplus | |
| Changes in Total Surplus | Do not include tax revenue in the surplus |
| Changes When Tax Revenue Is Included in Total Surplus After Taxes |
D represents demand, S represents supply, and P represents price.
When considering a graph, keep in mind the first quadrant with the origin at the bottom left,
and the plane with price on the vertical axis and quantity on the horizontal axis.
Here, we follow the convention that the demand curve slopes downward to the right.
Here, we follow the convention that the supply curve slopes upward to the right.
Here, we deal only with the first quadrant and do not consider prices or quantities equal to 0 or negative values.
We do not consider negative ad valorem taxes, which are equivalent to subsidies. We also do not consider t = 0.
The point where the demand curve and the supply curve intersect is defined as the equilibrium point.
The price at the equilibrium point is defined as the equilibrium price.
The quantity at the equilibrium point is defined as the equilibrium quantity.
The equilibrium price and quantity represent the market transaction price and quantity.
In a perfectly competitive market, the deadweight loss before taxation is zero; therefore, the display of the deadweight loss before taxation
is omitted and not reported.
Since tax revenue from the ad valorem tax before taxation is 0, its display is omitted,
and it is not output.
Here, the ad valorem tax is levied on producers (the supply side), and it is assumed that producers pass the tax onto prices;
therefore, after taxation, the supply curve shifts upward (parallel shift).
Government surplus is defined as tax revenue.
R6 (2024).08/04 (Sun)_Ver.001
Digit setting: 50 digits. Fixed digits.
Real number calculation mode.
When considering a graph, keep in mind the first quadrant with the origin at the bottom left,
and the plane with price on the vertical axis and quantity on the horizontal axis.
Here, we follow the convention that the demand curve slopes downward to the right.
Here, we follow the convention that the supply curve slopes upward to the right.
Here, we deal only with the first quadrant and do not consider prices or quantities equal to 0 or negative values.
We do not consider negative ad valorem taxes, which are equivalent to subsidies. We also do not consider t = 0.
The point where the demand curve and the supply curve intersect is defined as the equilibrium point.
The price at the equilibrium point is defined as the equilibrium price.
The quantity at the equilibrium point is defined as the equilibrium quantity.
The equilibrium price and quantity represent the market transaction price and quantity.
In a perfectly competitive market, the deadweight loss before taxation is zero; therefore, the display of the deadweight loss before taxation
is omitted and not reported.
Since tax revenue from the ad valorem tax before taxation is 0, its display is omitted,
and it is not output.
Here, the ad valorem tax is levied on producers (the supply side), and it is assumed that producers pass the tax onto prices;
therefore, after taxation, the supply curve shifts upward (parallel shift).
Government surplus is defined as tax revenue.
R6 (2024).08/04 (Sun)_Ver.001
Digit setting: 50 digits. Fixed digits.
Real number calculation mode.
No customer feedback for this calculation yet.
It pertains to the field of microeconomics.
It calculates the change (increase or decrease) in surplus in a perfectly competitive market subject to a specific tax.
Assume that the tax is imposed on producers (the supply side), and that producers pass the tax onto prices.
Assume that the demand and supply functions are given by linear equations.
The difference between the surplus after the ad valorem tax is imposed and the surplus before taxation
is defined as the change (increase or decrease) in surplus due to the ad valorem tax.
The deadweight loss (loss of welfare) resulting from the ad valorem tax is also output.
For total surplus (social surplus), we treat cases separately depending on whether tax revenue is included
or not.
We will not address unusual problems in which parts of the demand or supply curves lie outside the first quadrant.
Be careful not to confuse this with an ad valorem tax.