Microeconomics

Table of Contents

1. Topic pack - Microeconomics - introduction
2. 1.1 Competitive Markets: Demand and Supply
3. 1.1 Competitive Markets: Demand and Supply - notes
4. 1.1 Competitive markets - questions
5. 1.1 Competitive markets - simulations and activities
6. 1.2 Elasticities
7. 1.2 Elasticities - notes
8. Section 1.2 Elasticities - questions
9. Section 1.2 Elasticities - simulations and activities
10. 1.3 Government intervention
11. 1.3 Government Intervention - notes
    1. The impact of taxation
    2. Tax revenue
    3. Tax incidence
    4. Calculating effects of a specific tax
    5. Calculating impact of a tax - example
    6. The impact of subsidies
    7. Calculating effects of a subsidy
    8. Calculating effect of a subsidy - example
    9. Price controls
    10. Price ceilings
    11. Calculate effects of price ceiling
    12. Calculating effect of a price ceiling - example
    13. Price floors
    14. Calculate effects of price floor
    15. Calculating effect of a price ceiling - example
    16. Intervention in agricultural markets
    17. Common Agricultural Policy
12. 1.3 Government intervention - questions
13. 1.3 Government intervention - simulations and activities
14. 1.4 Market failure
15. 1.4 Market failure - notes
16. Section 1.4 Market failure - questions
17. Section 1.4 Market failure - simulations and activities
18. 1.5 Theory of the firm
19. 1.5 Theory of the firm - notes (HL only)
20. Section 1.5 Theory of the firm - questions
21. Section 1.5 Theory of the firm - simulations and activities
22. Print View

Tax incidence

Syllabus: Discuss the consequences of imposing an indirect tax on the stakeholders in a market, including consumers, producers and the government.

Syllabus: Explain, using diagrams, how the incidence of indirect taxes on consumers and firms differs, depending on the price elasticity of demand and on the price elasticity of supply.

Compare and contrast the two interactions below to see the difference in imposing a tax on a good with inelastic demand and one with elastic demand.

If you would prefer to view this interaction in a new web window, then please follow the link below:

• Tax burden - inelastic demand

If you would prefer to view this interaction in a new web window, then please follow the link below:

• Tax burden - elastic demand

Price Elasticity of Supply is less clear and you will have difficulty finding definitive answers to how PES affects the incidence of an indirect tax. However the diagrams below give you an insight into this:

Let´s do Some Economics

Draw a diagram with a perfectly elastic demand curve and an upward sloping supply curve. Tax on a good... who pays the tax now?

Draw a diagram with a perfectly inelastic supply curve and a downward sloping demand curve. Tax on a good... who pays the tax now?

Mainly you will focus on relativel elastic and relatively inelastic PED but you need to be aware of the effects of PES - it is on the syllabus after all.