Can you answer these questions using these short videos. Thanks EXAMINING THE EF

ID: 1126148 • Letter: C

Question

Can you answer these questions using these short videos. Thanks

EXAMINING THE EFFECT OF AN EXCISE TAX ON AN INELASTIC GOOD – CIGARETTES

http://www.econclassroom.com/?p=2771

EXAMINING THE EFFECT OF AN EXCISE TAX ON AN ELASTIC GOOD – CANDY BARS

http://www.econclassroom.com/?p=2774

What are the two types of indirect excise taxes?

What effect do these types of taxes have on consumers of the good or service that is taxed?

What effect do these types of taxes have on producers of the good or service that is taxed?

What effect do these types of taxes have on the government?

What effect do these types of taxes have on total welfare of those in the market of the good or service that is taxed?

Taxes on cigarettes and wine are two examples

Consumers consume less quantity of these goods and thus their utility decreases but in reality their welfare increases

The producers face less demand and hence earn less revenue and profit

Govt collects substantial amount of revenue

Total welfare increases but that of suppliers decreases

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