Micro CH 08

Application: The Costs of Taxation

Consumer Surplus

Welfare of buyers is measured by ___ ___

Producer Surplus

Welfare of sellers is measured by ___ ___.

Deadweight Loss

the fall in total surplus that results when a tax (or some other policy) distorts the outcome in an otherwise efficient market.

small

for a small tax, tax revenue is ___

grows

as the size of tax increases, tax revenue ___

falls

As the size of tax increases further, tax revenue ___

no revenue would be raised

for a very large tax, what happens to revenue?