Taxes and perfectly inelastic demand | Microeconomics | Khan Academy
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- Опубліковано 13 жов 2024
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Who bears the burden for the taxes when demand is inelastic
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Great presentation I fully understand it.
Sal, you should make some videos about subsidies
God bless you Khan!!!
@MCBLee give me 2 months :)
Very helpful thanks
I agree that taxing medical supplies is dangerous. In the real world there is a bigger problem regarding the amount charged not by the government via tax, but by monopoles from producers with the epipen being just one example. It is way overpriced and that is done with full conciousness, because there are no substitutes to regulate the market.
I don't get why the pharma company would price insulin af 75$ if they could easily make 30% more by demanding 100$. The price is perfectly inelastic, so why would they choose the "equilibrium" if increasing the price does nothing but increase profits, while not decreasing demand?
In the real world there is competition so it checks overpricing.
Mr.Sceptic Oh, oops, forgot about that :D
They cant choose the price that they want because there is a clear intersection between demand and supply curve. If they produce less then the demand is not filled and let the space available for the fill of another company.
If they produce more then the surplus is not selled and then reduce the revenue.
The only way of increase the revenue is in a monopoly market because they are price makers and there isnt a specific demand quantity.
@@Nemesis190292 Right, I think if there was somehow perfect competition in a completely inelastic market, then you'd see that equilibrium price, with a monopoly you see an infinite price (of course that's why IRL demand is never completely inelastic). I think pharma tends to be an oligopoly, so only a few companies compete, which tends to mean that with completely inelastic demand, they settle for some arbitrarily high price, and if then one competitor increases prices himself, and the others don't follow suit, he sells 0
when the tax burden is totally carried by the consumer it is easier for the market to evade taxes, right? the supplier could ask the consumer to avoid tax payment by paying a lower price (read tax evasion for private doctors). So, how to (economically) motivate consumers to pay more but legally apart from eventual criminilazation and risk of penalties? Should goods with inelastic demand be taxed less in general? Is there a way to consider elasticity of demand when applying a tax?
Thanks to who is able to answer!
is there a playlist for all these micro vids?
WOW BRO TELL ME MORE ABOUT THIS VIDEO AT HOME IN TORONTO
what would be the deadweight loss for this
if this didnt exist i would be up shit creek with my econ exam
3:35
Thanks Sal :)
love the colours :)
In physics, bricks are very elastic. Physics defines elasticity very differently