曼昆经济学原理英文版文案加习题答案.docx

曼昆经济学原理英文版文案加习题答案.docx

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曼昆经济学原理英文版文案加习题答案

Chapter8

ofTaxation

WHAT’SNEWINTHESEVENTHEDITION:

AnewIntheNewsboxon“TheTaxDebate”hasbeenadded.

LEARNINGOBJECTIVES:

Bytheendofthischapter,studentsshouldunderstand:

Øhowtaxesreduceconsumerandproducersurplus.

Øthemeaningandcausesofthedeadweightlossfromatax.

Øwhysometaxeshavelargerdeadweightlossesthanothers.

Øhowtaxrevenueanddeadweightlossvarywiththesizeofatax.

CONTEXTANDPURPOSE:

Chapter8isthesecondchapterinathree-chaptersequencedealingwithwelfareeconomics.Intheprevioussectiononsupplyanddemand,Chapter6introducedtaxesanddemonstratedhowataxaffectsthepriceandquantitysoldinamarket.Chapter6alsodescribedthefactorsthatdeterminehowtheburdenofthetaxisdividedbetweenthebuyersandsellersinamarket.Chapter7developedwelfareeconomics—thestudyofhowtheallocationofresourcesaffectseconomicwell-being.Chapter8combinesthelessonslearnedinChapters6and7andaddressestheeffectsoftaxationonwelfare.Chapter9willaddresstheeffectsoftraderestrictionsonwelfare.

ThepurposeofChapter8istoapplythelessonslearnedaboutwelfareeconomicsinChapter7totheissueoftaxationthatwasaddressedinChapter6.Studentswilllearnthatthecostofataxtobuyersandsellersinamarketexceedstherevenuecollectedbythegovernment.Studentswillalsolearnaboutthefactorsthatdeterminethedegreebywhichthecostofataxexceedstherevenuecollectedbythegovernment.

KEYPOINTS:

∙Ataxonagoodreducesthewelfareofbuyersandsellersofthegood,andthereductioninconsumerandproducersurplususuallyexceedstherevenueraisedbythegovernment.Thefallintotalsurplus—thesumofconsumersurplus,producersurplus,andtaxrevenue—iscalledthedeadweightlossofthetax.

∙Taxeshavedeadweightlossesbecausetheycausebuyerstoconsumelessandsellerstoproduceless,andthesechangesinbehaviorshrinkthesizeofthemarketbelowthelevelthatmaximizestotalsurplus.Becausetheelasticitiesofsupplyanddemandmeasurehowmuchmarketparticipantsrespondtomarketconditions,largerelasticitiesimplylargerdeadweightlosses.

∙Asataxgrowslarger,itdistortsincentivesmore,anditsdeadweightlossgrowslarger.Becauseataxreducesthesizeofamarket,however,taxrevenuedoesnotcontinuallyincrease.Itfirstriseswiththesizeofatax,butifthetaxgetslargeenough,taxrevenuestartstofall.

CHAPTEROUTLINE:

I.TheDeadweightLossofTaxation

A.Rememberthatitdoesnotmatterwhoataxisleviedon;buyersandsellerswilllikelyshareintheburdenofthetax.

B.Ifthereisataxonaproduct,thepricethatabuyerpayswillbegreaterthanthepricethesellerreceives.Thus,thereisataxwedgebetweenthetwopricesandthequantitysoldwillbesmalleriftherewasnotax.

Figure1

C.HowaTaxAffectsMarketParticipants

1.Wecanmeasuretheeffectsofataxonconsumersbyexaminingthechangeinconsumersurplus.Similarly,wecanmeasuretheeffectsofthetaxonproducersbylookingatthechangeinproducersurplus.

2.However,thereisathirdpartythatisaffectedbythetax—thegovernment,whichgetstotaltaxrevenueofT×Q.Ifthetaxrevenueisusedtoprovidegoodsandservicestothepublic,thenthebenefitfromthetaxrevenuemustnotbeignored.

IfyouspentenoughtimecoveringconsumerandproducersurplusinChapter7,studentsshouldhaveaneasytimewiththisconcept.

Figure2

3.WelfarewithoutaTax

Figure3

a.Consumersurplusisequalto:

A+B+C.

b.Producersurplusisequalto:

D+E+F.

c.Totalsurplusisequalto:

A+B+C+D+E+F.

4.WelfarewithaTax

a.Consumersurplusisequalto:

A.

b.Producersurplusisequalto:

F.

c.Taxrevenueisequalto:

B+D.

d.Totalsurplusisequalto:

A+B+D+F.

5.ChangesinWelfare

a.Consumersurpluschangesby:

–（B+C）.

b.Producersurpluschangesby:

–（D+E）.

c.Taxrevenuechangesby:

+（B+D）.

d.Totalsurpluschangesby:

–（C+E）.

6.Definitionofdeadweightloss:

thefallintotalsurplusthatresultsfromamarketdistortion,suchasatax.

D.DeadweightLossesandtheGainsfromTrade

Figure4

1.Taxescausedeadweightlossesbecausetheypreventbuyersandsellersfrombenefitingfromtrade.

2.Thisoccursbecausethequantityofoutputdeclines;tradesthatwouldbebeneficialtoboththebuyerandsellerwillnottakeplacebecauseofthetax.

Showthestudentsthatthenatureofthisdeadweightlossstemsfromthereductioninthequantityoftheoutputexchanged.Stresstheideathatgoodsthatarenotproduced,consumed,ortaxeddonotgeneratebenefitsforanyone.

3.ThedeadweightlossisequaltoareasCandE（thedropintotalsurplus）.

4.Notethatoutputlevelsbetweentheequilibriumquantitywithoutthetaxandthequantitywiththetaxwillnotbeproduced,yetthevalueoftheseunitstoconsumers（representedbythedemandcurve）islargerthanthecostoftheseunitstoproducers（representedbythesupplycurve）.

II.TheDeterminantsoftheDeadweightLoss

Figure5

A.Thepriceelasticitiesofsupplyanddemandwilldeterminethesizeofthedeadweightlossthatoccursfromatax.

1.Givenastabledemandcurve,thedeadweightlossislargerwhensupplyisrelativelyelastic.

2.Givenastablesupplycurve,thedeadweightlossislargerwhendemandisrelativelyelastic.

B.CaseStudy:

TheDeadweightLossDebate

1.SocialSecuritytaxandfederalincometaxaretaxesonlaborearnings.Alabortaxplacesataxwedgebetweenthewagethefirmpaysandthewagethatworkersreceive.

2.Thereisconsiderabledebateamongeconomistsconcerningthesizeofthedeadweightlossfromthiswagetax.

3.Thesizeofthedeadweightlossdependsontheelasticityoflaborsupplyanddemand,andthereisdisagreementaboutthemagnitudeoftheelasticityofsupply.

a.Economistswhoarguethatlabortaxesdonotgreatlydistortmarketoutcomesbelievethatlaborsupplyisfairlyinelastic.

b.Economistswhoarguethatlabortaxesleadtolargedeadweightlossesbelievethatlaborsupplyismoreelastic.

Activity1—LaborTaxes

Type:

In-classdiscussion

Topics:

Deadweightloss,taxation

Materialsneeded:

None

Time:

10minutes

Classlimitations:

Worksinanysizeclass

Purpose

Moststudentshavenotspentagreatdealoftimeconsideringtheeffectsoftaxationonlaborsupply.Thisin-classexercisegivesthemtheopportunitytoconsidertheeffectsofproposedtaxratesontheirownwillingnesstosupplylabor.

Instructions

Askstudentstoassumethattheyarefull-timeworkersearning$10perhour,$80perday,$400perweek,$20,000peryear.

Askthemiftheywouldquittheirjobsorkeepworkingifthetaxratewas10%,20%,30%,

…（upto100%）.

Keepatallyastheyshowhandsindicatingthattheyareleavingthelaborforce.

Askstudentswhattheythinkthe“best”taxrateis.

PointsforDiscussion

Manystudentshavenoideathatcurrentmarginaltaxratesaregreaterthan30%formanytaxpayers.

Studentswilllikelysaythatataxrateofzerowouldbebest,butremindthemthattherewouldbenoroads,libraries,parks,ornationaldefensewithoutatleastsomerevenueraisedbythegovernment.

III.DeadweightLossandTaxRevenueasTaxesVary

Figure6

A.Astaxesincrease,thedeadweightlossfromthetaxincreases.

B.Infact,astaxesincrease,thedeadweightlossrisesmorequicklythanthesizeofthetax.

1.Thedeadweightlossistheareaofatriangleandtheareaofatriangledependsonthesquareofitssize.

2.Ifwedoublethesizeofatax,thebaseandheightofthetrianglebothdoublesotheareaofthetriangle（thedeadweightloss）risesbyafactoroffour.

C.Asthetaxincreases,theleveloftaxrevenuewilleventuallyfall.

D.CaseStudy:

TheLafferCurveandSupply-SideEconomics

1.TherelationshipbetweenthesizeofataxandtheleveloftaxrevenuesiscalledaLaffercurve.

2.Supply-sideeconomistsinthe1980susedtheLaffercurvetosupporttheirbeliefthatadropintaxratescouldleadtoanincreaseintaxrevenueforthegovernment.

3.EconomistscontinuetodebateLaffer’sargument.

a.Manybelievethatthe1980srefutedLaffer’stheory.

b.Othersbelievethattheeventsofthe1980stellamorefavorablesupply-sidestory.

c.Someeconomistsbelievethat,whileanoverallcutintaxesnormallydecreasesrevenue,sometaxpayersmayfindthemselvesonthewrongsideoftheLaffercurve.

ALTERNATIVECLASSROOMEXAMPLE:

Drawagraphshowingthedemandandsupplyofpaperclips.（Draweachcurveasa45-degreelinesothatbuyersandsellerswillshareanytaxequally.）Marktheequilibriumpriceas$（perbox）andtheequilibriumquantityas1,000boxes.Showstudentstheareasofproducerandconsumersurplus.

Imposea$taxoneachbox.Assumethatsellersarerequiredto“pay”thetaxtothegovernment.Showstudentsthat:

▪thepricebuyerspaywillriseto$.

▪thepricesellersreceivewillfallto$.

▪thequantityofpaperclipspurchasedwillfall（assumeto800units）.

▪taxrevenuewouldbeequalto$160（$⨯800）.

Havestudentscalculatetheareaofdeadweightloss.（Youmayhavetoremindstudentshowtocalculatetheareaofatriangle.）

Showstudentsthatasthetaxincreases（to$,$,and$,taxrevenuerisesandthenfalls,andthedeadweightlossincreases.

E.IntheNews:

TheTaxDebate

1.Recently,policymakershavedebatedtheeffectsofincreasingthetaxrate,particularlyonhigher-incometaxpayers.

2.ThesetwoopinionpiecesfromTheWallStreetJournalpresentbothsidesoftheissue.

Activity2—TaxAlternatives

Type:

In-classassignment

Topics:

Taxesanddeadweightloss

Materialsneeded:

None

Ti