Purchase Solution

Taxes and How They Affect Surplus

Not what you're looking for?

Ask Custom Question

What happens to consumer and producer surplus when a good is taxed? Explain using the concept of deadweight loss.

Purchase this Solution

Solution Summary

Using the concept of deadweight loss, the effect of taxes on consumer and producer surplus is examined. Includes a graph.

Solution Preview

The consumer and producer surpluses are the monetary values that consumers and producers receive from transactions. Consumer surplus occurs when consumers buy goods for less than the highest value than they would be willing to pay. Producer surpluses occur when the prices of goods sold are higher than the lowest price the producer would accept.

The concept of a deadweight loss is used to describe how a free market is affected by some sort of interference. For ...

Purchase this Solution

Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.