00:01
So when we talk about who is paying the burden of a tax, that's what an economist would call the study of tax incidents.
00:07
Where does the burden fall? who is paying the tax? and what we know is that the demand curve is much more elastic than the supply curve.
00:16
So let's draw a market where the demand is much more elastic than the supply.
00:22
So this demand curve is very elastic.
00:24
So i'm going to draw an elastic demand curve that's pretty flat.
00:28
And then i'm going to draw a very inelastic supply curve, right? so here's my supply curve.
00:33
This would, of course, yield an equilibrium, right? which has a equilibrium price and an equilibrium quantity.
00:42
And now we're going to start imposing a tax, right? so a tax doesn't say whether it is, it's going to impose it on sellers, right? so it's a tax on supply.
00:54
The supply curve is shifting up to reflect the tax.
00:58
That is being assessed by the government.
01:01
The tax is being assessed.
01:05
So if i'm going to need to draw that, have this tax here, this becomes my new equilibrium, right? this is my equilibrium after the tax.
01:14
And you'll notice that the price has gone up.
01:17
The price has gone up, just a little bit, just a little bit.
01:21
But what's happened to the price received by firms, right? the price received by firms has fallen.
01:28
A lot, right? this is now going to be the price received by the firms, and this here is going to be the price paid, right? and that difference is the tax, right? that's the difference between the two supply curves is the amount of the tax...