$ amount taxes aren't "artificial". Federal liquor and beer taxes (and part of many state alcohol taxes), most cigarette taxes, white goods disposal fees, vehicle registration fees, land recording fees, some FCC fees on phone lines, and many environmental regulations can be viewed as fixed $ amount per unit taxes. It is just one simple, but fairly common taxation method.
@Acerola211 Continuing a bit- Also, what we are talking about here is only ONE kind of efficiency we look at-- You are thinking about things like "production efficiency", "x efficiency", and "cost minimization" (we also look at allocative, Pareto efficiency, etc...). Microeconomics certainly analyzes these issues as well- but in this context we aren't focusing on them-- they are sort of assumed in the background. I'll be making some videos about these issues later this semester.
@Acerola211 Exactly- Here we want to use resources to provide the highest total benefit(measured by willingness to pay)-total cost=surplus. We need to identify exactly what your disagreement with DWL is. Forget about tobacco for a minute and focus on apples. You are correct that maximizing "happiness" is purely psycological... but what would you have us maximize? From a human standpoint, is there anything "real" other than the psychological? We do treat "bad" things differently.
@BurkeyAcademy I mean, I don't personally think that there should be a hamburger tax, obviously - I'm pointing out that an economist's definition of 'efficient' is different from, say, an engineer's definition of 'efficient'. The 'deadweight loss' seems to be purely psychological and has no real world consequences in 'loss of efficiency' to me. (cont'd)
You have to remember that the supply/demand graph here is saying that with the tax, the government is going to sell 3 million hamburgers at $4 each, $.60 of that $4 is going to be taxes to the government. The government is getting a $.60 tax revenue on all 3 million hamburgers. They are not getting $.20 on the first million, $.40 on the second million and $.60 on the third million, but rather $.60 on all three million.
I don't understand deadweight loss. Can't you argue that, since only 3 mil instead of 3.5 mil hamburgers are produced, 0.5 mil hamburgers worth of resourced were freed up for doing other economic activities? What if the equilibrium point caused everybody to be obese and people didn't need that many hamburgers? Can't you argue that it's more 'efficient' for people to *not* be obese (and therefore don't need to waste time and resources trying to lose weight / get rid of diabetes / whatever)?
@BurkeyAcademy (cont'd) I mean, 'efficiency' usually means something along the lines of 'using the least amount of resources to accomplish the most tasks', right? If excess resources are used up for, say, tabacco when that land could be used to grow apples or build a factory for producing medicine or something, what's the loss in taxing tabacco to reduce its consumption? How does 'deadweight loss' indicate real 'inefficiency'?
@Acerola211 Yes, resources are freed up, just as if we banned bread or taxed kittens. But this hurts people: people can't enjoy what they don't buy. I love hamburgers and am not obese-- why should you tax me and make me eat fewer hamburgers? An economist (me) says to go after obesity and other self-caused diseases more directly. An analogy- some countries help the poor by lowering food prices for EVERYONE. This is as bad as raising the burger prices for everyone. Not targeted...
Well done, but has a flaw in the end. Since it´s not a flat 60 cents tax, but a percentage, you can not calculate the government revenue by just multiplying, there is more calculation to do.
Why there are dislikes in this video . This teaches better than my teacher
100 more videos left:D, I just noticed there are no advertisements on these videos..
you are better than my uni lecturers! thank god for khanacademy!
$ amount taxes aren't "artificial". Federal liquor and beer taxes (and part of many state alcohol taxes), most cigarette taxes, white goods disposal fees, vehicle registration fees, land recording fees, some FCC fees on phone lines, and many environmental regulations can be viewed as fixed $ amount per unit taxes. It is just one simple, but fairly common taxation method.
@Acerola211 Continuing a bit- Also, what we are talking about here is only ONE kind of efficiency we look at-- You are thinking about things like "production efficiency", "x efficiency", and "cost minimization" (we also look at allocative, Pareto efficiency, etc...). Microeconomics certainly analyzes these issues as well- but in this context we aren't focusing on them-- they are sort of assumed in the background. I'll be making some videos about these issues later this semester.
@Acerola211 Exactly- Here we want to use resources to provide the highest total benefit(measured by willingness to pay)-total cost=surplus. We need to identify exactly what your disagreement with DWL is. Forget about tobacco for a minute and focus on apples. You are correct that maximizing "happiness" is purely psycological... but what would you have us maximize? From a human standpoint, is there anything "real" other than the psychological? We do treat "bad" things differently.
What about the lack of tax revenue generated from the area of the dead-weight loss? In real life, Is that substantial enough to care about?
@BurkeyAcademy I mean, I don't personally think that there should be a hamburger tax, obviously - I'm pointing out that an economist's definition of 'efficient' is different from, say, an engineer's definition of 'efficient'. The 'deadweight loss' seems to be purely psychological and has no real world consequences in 'loss of efficiency' to me. (cont'd)
You have to remember that the supply/demand graph here is saying that with the tax, the government is going to sell 3 million hamburgers at $4 each, $.60 of that $4 is going to be taxes to the government. The government is getting a $.60 tax revenue on all 3 million hamburgers. They are not getting $.20 on the first million, $.40 on the second million and $.60 on the third million, but rather $.60 on all three million.
I don't understand deadweight loss. Can't you argue that, since only 3 mil instead of 3.5 mil hamburgers are produced, 0.5 mil hamburgers worth of resourced were freed up for doing other economic activities? What if the equilibrium point caused everybody to be obese and people didn't need that many hamburgers? Can't you argue that it's more 'efficient' for people to *not* be obese (and therefore don't need to waste time and resources trying to lose weight / get rid of diabetes / whatever)?
Great video! :D
@BurkeyAcademy (cont'd) I mean, 'efficiency' usually means something along the lines of 'using the least amount of resources to accomplish the most tasks', right? If excess resources are used up for, say, tabacco when that land could be used to grow apples or build a factory for producing medicine or something, what's the loss in taxing tabacco to reduce its consumption? How does 'deadweight loss' indicate real 'inefficiency'?
@Acerola211 Yes, resources are freed up, just as if we banned bread or taxed kittens. But this hurts people: people can't enjoy what they don't buy. I love hamburgers and am not obese-- why should you tax me and make me eat fewer hamburgers? An economist (me) says to go after obesity and other self-caused diseases more directly. An analogy- some countries help the poor by lowering food prices for EVERYONE. This is as bad as raising the burger prices for everyone. Not targeted...
Tax should never be on Hamburgers or ANY food product, btw
Well done, but has a flaw in the end. Since it´s not a flat 60 cents tax, but a percentage, you can not calculate the government revenue by just multiplying, there is more calculation to do.
U is wrong buddy
wow look at these flame war
Shouldnt 20% of 4$ be 80 cent? Am i missing smth here
quite cool. also, FIRST
has shrunk. >.>
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