Chapter 5: Market Outcomes and Tax Incidence

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Last updated 11:54 PM on 10/4/26
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11 Terms

1
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consumer surplus

willingness to pay minus price actually paid; area below demand curve and above market price

2
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producer surplus


price actually received minus willingness to sell; area below market price and above supply curve

3
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efficiency

maximizing total surplus in a market (or social welfare)

4
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deadweight loss (DWL)

dollar amount of reduction to CS and PS due to the tax.

5
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excise taxes

taxes levied on a particular good or service

6
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buyer tax burden

difference between post tax equilibrium and pre tax equilibrium

7
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seller tax burden

difference of pre tax equilibrium PRICE and tax amount

8
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entire tax

buyer burden when demand is perfectly inelastic

9
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0

seller burden when demand is perfectly inelastic

10
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0

buyer burden when demand is perfectly elastic

11
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entire tax

seller burden when demand is perfectly elastic