How to calculate Excise Tax and the Impact on Consumer and Producer Surplus

Tutorial showing how taxes reduce consumer surplus, producer surplus and causes society to have a deadweight loss. Includes how taxes are shared between consumer and producer.
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[@economicsfun]

That is a very good observation/question. An income tax does not impact consumption of any specific goods. You are right it reduces overall demand. On the other had taxes on consumption or on taxes on goods does impact the consumption of goods. From a consumer theory perspective a tax on all goods should have the same impact as a reduction income. Keep in mind, consumers can spend or save their money. An income tax will negatively impact savings.

[@IEYouthSlamTeam]

I have an exam monday and didn't go to class this past week because I'd get bad headaches with my professors complicated vernacular and use of economics lingo. I was convinced economics was only for the elite. The way you break it down & explain it--you made it so ...down to earth and simple.---KZbinUniversity!

[@bychen5011]

11 years later, how are you doing now?

[@legiononyx2898]

this was very clear, and extremely helpful. Great video!!!

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[@truthaboutabs1303]

Elena Stefanovska Thanks anyway

[@kelthuzad7]

Saw this video 7 years after uploading and you don't know how it makes my life super easy for my exam

[@zaarahasan9158]

How did you calculated fhe new equilibrium price and quantity? 10 and 5???

[@economicsfun]

Thanks! Too often Calculus is skipped because it is too hard, but I think if it is explained well it can be really useful for students. Again I appreciate your feedback it helps me know I am on the right track.

[@EverythingIsUnreal]

super professional video! one of the best i've ever seen on youtube. I'm just happy that there are people like you who share such a useful stuff

[@economicsfun]

You are very welcome! I glad to hear that the videos are helping you in your classes. Make sure you like MyBookSucks on FaceBook (see link in video description). This will help others find the educational videos.

[@LeToxik]

I learn more from you and this video than from the microeconomics class I pay hundreds of dollars for.

[@AsgharKhan-fd1ul]

i just love your Calculus. It makes things very very easy and comprehensible. Thanx. please don't stop posting more videos

[@carpediemdiem]

Life saver! I didn't understand this in class and now we have an assignment about this and I thought I was screwed until I found this! THANK YOU!!!

[@economicsfun]

I am glad you find the tutorials helpful. A lot of people teaching economics (or writing books) don't realize they are even skipping steps. They have the curse of knowledge. Make sure you like MyBookSucks on Facebook (you can see the link in the video description). I post college humor and it will help others find the free videos. Good luck in your classes and let me know how you do in econ. Especially ways I can improve the videos.

[@jasminer3607]

it is very clear! I didn't understand the concept in the class before, but right now I am good with them. Thank you for uploading this video. :)

[@economicsfun]

+Jasmine R You are very welcome! If you get a chance like and share the videos and especially like my FB page (www.Facebook.Com/PartyMoreStudyLess), It will help others find the videos.

[@kipp4805]

Excellent video, although an explanation on finding these using algebraic equations would be super helpful. I think people watching this are primarily doing so for a class, and more often than not, there is no graph provided. The graph is extremely helpful for grasping the concept, but an algebraic equation walkthrough would be awesome!

[@CaliWali07]

Thanks for taking the time to show every step. I wish my book showed all of these steps. If it did I probably wouldn't find econ so confusing.

[@economicsfun]

It is just the way that I drew the graph. The 20, where Demand intersects with the Price axis (Y axis) is just a given number (I just made it up). I probably should be more clear when I introduce the problem.

[@economicsfun]

That is a great question. Market power means a company/entity or even a person that can disproportionately influence or control a market. The problem occurs when they manipulate supply, demand, or information for their own benefit. Think of Google and internet searches. It is fine as long as Google is not manipulating search results for its own benefit. Think of a large manufacturer manipulating small suppliers for prices below market price or below cost.

[@ovoReverie]

Fantastic explanations. This was extremely helpful, and I thank you.

[@economicsfun]

Great comment, much appreciated. I hope my students love my classes. Make sure you like MyBookSucks on Facebook (see link in video description). This will help others find the educational videos.

[@economicsfun]

Great to hear the videos are helping you out and good luck on your exam too. Appreciate the feedback as well. Make sure you like MyBookSucks on FaceBook (see the link in the video description). This will help others find the free videos, you can help ease their pain!

[@Smile-ov1us]

Finally and econimics video that is actually easy to understand. WHY DON'T PEOPLE UNDERSTAND THAT THE MICROPHONE IS SO IMPORTANT

[@danielfabian4419]

How did you decide that Supplies Y intercept is 2? Can you do a walkthru like this but with real equations, sort of set up how it would be shown on a quiz? Thanks!

[@economicsfun]

Wow that is great to hear! I have thought for a long time that colors and animation can make economics much easier to understand. Thanks for the feedback much appreciated. Make sure you like MyBookSucks on FaceBook (see link in video description) this help others find the videos.

[@georgiofasoulis]

you explained this way better than my econ teacher at my university hahah...the colors really help a lot

[@lujieqi4116]

it is very helpful and useful for me as a international student. Thank you so much~~

[@economicsfun]

haha! You have incredible hearing. That would be my cat, Boots, walking around.

[@kelvinchan552]

This is amazing! Detailed explanation with a great example can't thank you enough!

[@DeeWhoaaa]

This is INCREDIBLY helphful!! Thank you!!!

[@iloveroblox.11]

I got an exam tomorrow, and this was super helpful. thank you.

[@tvvt005]

8:35 how is it understood that producers bear 1 unit and consumers bear 2 units in this example?

[@economicsfun]

You are very welcome. Make sure you like MyBookSucks on FaceBook (see link in video description). This will help me get the word out about the free videos.

[@Sophievan88]

great explanation. very beautiful graph. tkx a lot!

[@victorjonsson5238]

10 years later, extremely good

[@economicsfun]

You are very welcome! Make sure you like MyBookSucks on FaceBook (see link in video description). This will help others find the educational videos.

[@DannyMLT]

Great Vid once again, however, Is the tax you are talking about a Lump sum tax , proportional tax or Progressive tax ? These will have different effects Thanks, Dan

[@economicsfun]

Thanks so much for you compliments. Make sure you like MyBookSucks on Facebook (see link in video description). This will help others find the free videos.

[@richardaddison15]

Great video and very simple to understand. Thanks a lot

[@thevideoguy714]

Everything needs to be taught this way! I like how easily visible the numbers are shown and moved around. If only Calculus had videos like this... I would definitely subscribe to KZbin Red for that ;)

[@littlebirdwalking950]

how do you do this without a graph and just the line equations?

[@nom892]

thank you very much, excellent videos by the way

[@shanefortworth]

Excellent video professor! We econ students rely on professors like you heavily. Is it possible that government taxation only on income and not on goods is better on society? How could we compare the deadweight loss based on taxing a good vs. downward shift in the demand curve due to taxing same amount on income? I believe this is known as the lump sum principle?

[@economicsfun]

Good question. That could happen, but I am not sure it does. Think about cigarettes and they are very inelastic good. I don't think high taxes are discouraging those with lower incomes to purchase less cigarettes. The same could be said about alcohol too. I am not positive though.

[@qwertywtf]

Hi, do you have a video on subsidies? I understand how to get the tax revenue on an increase in tax, but I'm confused on how to calculate the cost to tax payers on a subsidy. Thanks

[@SOSTacoJohnson]

you are so awesome. i bet your students fuckin love yur classes.

[@valeriem7077]

great video, thank you!

[@sumedikanishadi3388]

Best way.. Thank you

[@AGirlUnderTheStairs]

This helped so much, thanks !

[@economicsfun]

Great to hear! Make sure you like MyBookSucks on FaceBook (see link in video description).

[@shawnakaylor74]

I am having a terrible time understanding this. The video explains this very well but I am getting lost at some point after the tax is imposed. I don't understand where the 5 comes from after the tax of three is added. I am going to fail this class. It doesn't seem anything is going to help me get it. I start to understand then at a certain point, my brain shuts down and I am incapable of understanding anything else.

[@economicsfun]

+shawna rkay Don't give up! You can do it. Economics can be confusing and that is why so many students hate the class. I am not exactly sure which 5 you are referring to. Let me know the point in the video you are having a hard time with and I will try to explain it better.

[@jokerledger3233]

She is talking about the new quontity that comes after taxes. Why is it 5? why not 4 or 3 or something else. how do you determine it?

[@nom892]

In this instance of a tax imposed on a good with a PED lower than the PES and hence the tax falling more heavily on the consumer, what does this mean in practice for consumers and firms? That those on lower incomes are 'priced out' of the market?

[@XU0038221]

why use old supply curve but not new supply curve to calculate producer surplus?

[@ilovebeingfunnylol]

How did you get 5 at 4:18? Can someone please help me?

[@wsucoug171]

I am wondering the same thing

[@watdatiffany]

Thk u very much, this is very helpful

[@indrakusnadi3941]

please, can someone tell me how he got 7 after the new quilibrium. I have a mid term tomorrow :(((

[@jadrobe3492]

Lmao I love how two people liked your comment but nobody replied to help you

[@zaarahasan9158]

Sameeee

[@jn1217]

10-3=7.

[@TonyStark-ir8ke]

Why does the supplier increase his price to 7 from 6 when the tax is imposed?

[@lucasbueno2053]

So when calculating community surplus do you add the green rectangle?

[@economicsfun]

Great to hear and your feedback is much appreciated. Make sure you like MyBookSucks on FaceBook (see link in video description). This will help others find the educational videos.

[@alimohamedmahmoud3766]

very helpful you explain better than my phd doctor

[@xFuLLofMetalz]

If there is a tax and both supply and demand curves are equally elastic, is the consumer and producer surplus the same in area?

[@economicsfun]

아니예요 . I am happy my videos help you. Make sure you like MyBookSucks on FaceBook (see the link the video description)

[@minnie_mayhap]

Bless you, kind soul!

[@melladnasir1763]

Thank you!

[@PoweredByTerror]

Great very helpful!!

[@damianmartinez2924]

Why can a deadweight loss occur when a price ceiling is set below equilibrium even though some consumers increase their consumers surplus?

[@economicsfun]

Appreciate that! Make sure you like MyBookSucks on FaceBook (see link in video description). This will help others find the educational videos.

[@missreneerobey]

Does the tax shift the demand curve at all or is it only the supply curve which shifts?(:

[@yami4277]

supply curve

[@ryanbrooks9152]

0:14 meow

[@erhbilguuntugjargal2413]

i understand all of what i don't understand.thanks

[@economicsfun]

Thank you for the positive feedback! Make sure you like MyBookSucks on FaceBook (see the link in the video description). This will help others find the free videos.

[@앤디-w6g]

Personally you teach better than our profroessor

[@kiranshrestha3990]

shouldn't the producers surplus after the upard shift of supply curve be that red triangel above that curve????? because part below that triangle represents the total variable cost for that shifted supply curve

[@hlcohenfuentes]

This all makes sense except for one part. How do you know that it intercepts at 20?

[@yongstandleyngong4079]

Good

[@pending8842]

that's sensational including the last advice :D :D :D

[@tapytapie4251]

thank u

[@yubin0]

youre way better than the fucking dude from ACDC, who talks WAY too fast

[@winniecheoh3823]

I heard a cat!

[@economicsfun]

Winnie Cheoh You have wonderful hearing. That was my cat boots that use to live with us.

[@DeeWhoaaa]

*Helpful

[@mamasama7176]

Great video, but you need to hurry up a bit.

[@hp4134]

mewmew

[@economicsfun]

haha! You have incredible hearing. That would be my cat, Boots, walking around.

[@iloveroblox.11]

I got an exam tomorrow, and this was super helpful. thank you.