Excise Taxes Overview

A tax that is paid directly by individuals to the government.

A tax collected by suppliers from consumers.

A tax on a specific product, expressed as a fixed dollar amount per unit.

The shift in the supply curve caused by an excise tax.

The impact of an excise tax on the supply curve, resulting in a new supply curve (Stax) that shows the price consumers pay and the price producers receive.

The point where the demand curve intersects the Excise Tax curve, representing the price consumers ultimately pay after the tax is imposed.

A vertical dotted line drawn downwards from the point where the demand curve and excise tax curve intersect, representing the price producers receive after the tax.

The original supply curve before the tax, representing the relationship between the price producers receive and the quantity they supply.

The relationship between the price of a good or service and the quantity consumers demand.

The point where the supply and demand curves intersect, representing the equilibrium price and quantity in a market.

The concentration of something in a specific location.

A group of people with a higher level of income.

The immediate surroundings of a place or person.

The idea that certain things are more likely to be found in specific places due to various factors.

The likelihood of finding certain things in a particular area.

The relationship between income and location.

The uneven distribution of resources, opportunities, or wealth in society.

The study of how people, resources, and ideas are spread across different places.

A visual representation of income distribution in a society, showing the proportion of total income earned by different portions of the population.

The Lorenz Curve helps us understand how income is distributed among different groups within a society, revealing the degree of income inequality.

A perfectly equal income distribution would be represented by a diagonal line on the Lorenz Curve, where every segment of the population earns the same proportion of total income.

The greater the deviation of the Lorenz Curve from the line of perfect equality, the higher the level of income inequality in a society.

The Gini coefficient, a numerical measure, is derived from the Lorenz Curve. It ranges from 0 (complete equality) to 1 (complete inequality).

The Gini coefficient helps to quantify income inequality and allows for comparisons of income distribution across different countries or time periods.

The Lorenz Curve helps us understand the distribution of income, while the Gini coefficient provides a numerical measure of income inequality.

Analyzing the Lorenz Curve and Gini Coefficient helps inform policies aimed at reducing income inequality and promoting social justice.

A new supply curve that reflects the price consumers pay after an excise tax is imposed.

When the demand curve becomes steeper (more inelastic), the consumer burden of a tax increases. This means consumers pay a larger portion of the tax.

The 'consumer burden' refers to the portion of a tax that consumers ultimately pay. It's the difference between the price they pay after the tax and the original price.

The steepness of the demand curve represents the sensitivity of consumers to price changes. A steeper curve means demand is less responsive to price changes (inelastic).

The demand curve shows the relationship between the price of a good and the quantity consumers are willing to buy at each price. A steeper demand curve means consumers are less sensitive to price changes.

The box on a supply and demand graph that represents the amount of revenue the government collects from a tax is called 'Box A'.

When the demand curve becomes steeper, 'Box A' (tax revenue) gets larger. This means the government collects more money.

A situation where individuals can move between different income levels within a society, creating opportunities for advancement.

A system where individuals can change their financial well-being through their own efforts and choices.

A system where individuals can change their financial well-being through their own efforts and choices.

A line on the Lorenz Curve representing perfect equality, where each segment of the population earns the same proportion of total income.

A line on the Lorenz Curve representing perfect inequality, where all income is concentrated in the hands of the highest earners.

The closer the Lorenz Curve gets to the perfect equality line, the more equal the income distribution is.

The farther the Lorenz Curve deviates from the perfect equality line towards the perfect inequality line, the more unequal the income distribution is.

A measure that quantifies income inequality, derived from the Lorenz Curve, ranging from 0 (complete equality) to 1 (complete inequality).

Comparing two Lorenz curves helps understand the income distribution in different countries or time periods.

The area between the Lorenz Curve and the perfect equality line represents the degree of income inequality.

Analyzing the Lorenz Curve and Gini coefficient helps inform policies aimed at reducing income inequality and promoting social justice.