Taxes on Supply

TAXES ON SUPPLY

    A government can state a tax price on goods or services so this price which increasing affects demand and supply.In additionaly,taxes derives a change on supply curve that means suppy curve decreases and shifts to the left .Quantity demand also decreases at the same time.

Let's think about taxes effect on supply an on example:

There are two different prices on this chart as you see,first one equilibrium price and the other one is p1 (new price,after the taxation).At this point,sellers have to state a new price between p1 and p equ.










      After the taxation we can find four important condition about taxes.

1)Marginal Cost:There is a diference between cost of produces goods and cost of produced good after taxation.There is a formul to find out marginal cost:

MC:Pnew-tax

2)Consumer's share:Total purchases of a consumer

CS:(Pnew-Pold).Qnew

3)Producer's share:Total purchases of a producer

PS:(Pold-Mc).Qnew

4)Social Cost: It's also called private cost it's total expenses of society whao affect economic production

SC:tax(Qold-Qnew)/2



One example: In a smartphone market 10 million phones are sold 800 $ ,after the taxation about 100$ what will it happen in this market?

also a)Marginal cost ?
       b)Consumer's share?
       c)Producer's share?
       d)Social Cost?
   

Firstly We have to determine a price among Pnew and Pequ and we can choose a price what we want among P new and P equ .New Quantity must be determined less than old quantity.

Pold-Pnew-P+tax         Qold-Qnew
800$-850$-900$            10  -  8

a)MC:900-100:800
b)CS:(850-800).8:400
c)PS:(900-800).8:800
d)SC:100(10-8)/2:100