What to explore
Change parameters and watch the model adjust.
- Demand and supply intercepts and slopes
- Per-unit tax size
Intermediate price theory
Per-Unit Tax Incidence
A specific-tax model that shows the buyer-seller wedge, quantity contraction, tax revenue, and deadweight loss.
Focus
Buyer burden, seller burden, revenue, and deadweight loss
See how a per-unit tax alters prices on both sides of the market and divides the burden between buyers and sellers.Core ideas
Interpret the mechanics before you chase the graphs.
- A tax wedge reduces traded quantity and reallocates surplus.
- Revenue is a transfer, while deadweight loss is surplus that disappears.
- Incidence depends on which side of the market is less able to adjust quantity.
Learning goals
What this model should help students internalize.
- Compute post-tax prices paid by buyers and received by sellers.
- Relate the tax wedge to revenue and deadweight loss.
- Connect incidence to the relative responsiveness of demand and supply.
Prerequisites
Concepts to review before diving in.
- Competitive equilibrium with demand and supply
- Basic surplus geometry
Next models to study
Keep moving through the track.
Intermediate price theory
Price Ceilings and Price Floors
Switch between ceilings and floors to see when the policy binds, how traded quantity changes, and where welfare losses come from.
Intermediate price theory
Elasticity and Tax Incidence
Compare how buyer and seller tax shares move as demand or supply becomes more or less elastic.