Relationship Between Tax Revenues

3. Relationship between tax revenues, deadveight loss, and demandelaseicity The gaverntent is curtidering levwing a tan of
$100
per untit en suppliers of either leathar jackets ar smartphanesi. The supply eurve for each of these demand for sinartphones is shenon by
D Relationship Between Tax Revenues
s

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(en the second graphy). Suppose the government taces leather jackets. The folewing graph shows the annual supply and denamd for this gsod. It abso shews the sugply ourve
⟨S+
Tax] shifted up by the amount ol the proporsed tax (\$\$000 per jacket). Ifstead, suppowe the govetrnment tames smartphones. The follawifg graph shows the anfual supply and demand for this good, as well as the supply curve shifted up by the amount of the prspósed tax \{5so0 per phone). because, al ebse hed corciart, taxing a good with a relatively smalke deadweight lós. Relationship Between Tax Revenues

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