List of Diagrams

There are lots of diagrams to be familar with in Economics. This section has a collection of video tutorials taking you through the drawing of the diagrams. Some assume that you understand key topics so make sure you read the description and watch them in the right order if you are unsure. There is a list of all the diagrams below you can click on or you can scroll down to see them all.

Tuesday, 03 December 2013 12:05

Demand and Supply - The Impact of a Tax

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Many things can shift a demand or supply curve and students often get confused about which curve they should be shifting. There is, however an easy way to decide. Remember, the price does not change straight away, it changes because a change in demand or supply creates a shortage or surplus. The key question to ask is "If the price stayed the same, who would care?".

Take the often confused example of an indirect tax (a tax on spending). This shifts the supply curve. If the government places a tax on the sale of a good and the price stayed the same, consumers wouldn't care. They are not interested in what proportion of the price goes to the firm and what to the government, only how much they pay overall. The producer on the other hand is now keeping less of the money from each sale as some is going to the government and so they will offer less at the same price.

This video tutorial takes you through what happens after this shift in supply, how the new market price is reached and how much of the tax will be passed on to the consumer in increased prices. If you are a little unsure on how to draw a demand and supply diagram, I suggest that you have a look at the demand and supply tutorial first or you may not follow everything that is going on.

Unfortunately at the moment the tutorials are only available using flash so they may not work on mobile devices.

 

Read 2152 times Last modified on Tuesday, 05 May 2015 15:53
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