Wednesday, December 16, 2009

Two-Minute Drill--Taxes

Summary: Drill over taxes.

As a warm up, have your students answer the following questions on a tax to correct a negative externality. My answers are: $320; $6; $50; $90; $150; 1.769.

If the demand curve were steeper, then the effect on quantity demanded would have been less. Students also have problems determining who bears the burden of the tax. In this case the buyer and seller bear the burden equally. The consumer pays $3 more for the good and the producer keeps $3 less.

In AP Microeconomics, the tax is placed on the producer.

About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is an author and blogs at Mikeroeconomics.


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