Timeline for Integral solution (or a simpler) to consumer surplus - What is wrong?
Current License: CC BY-SA 4.0
17 events
| when toggle format | what | by | license | comment | |
|---|---|---|---|---|---|
| Dec 10, 2020 at 18:34 | comment | added | Herr K. | @bymathformath: That looks correct. | |
| Dec 10, 2020 at 11:23 | comment | added | user31331 | @HerrK. That leaves me with my assumtion and by calculation I get $\frac{at^{2}}{2}$ | |
| Dec 10, 2020 at 4:16 | comment | added | Herr K. | @bymathformath: DWL is not equal to the full reduction in CS, because part of the reduction in CS becomes tax revenue, which is not a loss for society. If you're willing to assume that supply is perfectly elastic, then $DWL = CS-CS_{tax}-t\cdot D(p_0+t)$. Just draw a diagram to see this. | |
| Dec 10, 2020 at 2:05 | comment | added | user31331 | But to be fair there is no mentions of supply. | |
| Dec 10, 2020 at 1:10 | comment | added | user31331 | @HerrK. It was confused me for a week straight now so would really like a clarification of it. | |
| Dec 10, 2020 at 1:08 | comment | added | user31331 | Hmm okay I discussed this with another user - check this economics.stackexchange.com/questions/41267/… (what would it look like in that case if it is not what is given in the thread because that is making me quite confused) | |
| Dec 10, 2020 at 0:01 | comment | added | Herr K. | @bymathformath: The change in CS is correct, but DWL is not. DWL has to include reduction in producer surplus and exclude tax revenue. | |
| Dec 9, 2020 at 18:51 | comment | added | user31331 | @HerrK.* forgot the tag. | |
| Dec 9, 2020 at 17:51 | comment | added | user31331 | May I ask one more thing; would the change in consumer surplusbecause of a tax just be $- \Delta CS=-(CS-CS_{tax})$ and the DWL just be with reversed sign i.e $DWL= \Delta CS=CS-CS_{tax}$ ? | |
| Dec 3, 2020 at 7:51 | vote | accept | CommunityBot | ||
| Dec 3, 2020 at 2:03 | comment | added | Herr K. | @bymathformath: Yes you are correct. | |
| Dec 2, 2020 at 22:56 | comment | added | user31331 | @HerrK. Okay thanks! In terms of if price increase in terms of tax to $p_{1}+t$ then the new surplus is just the same formula but with this price substituted in right? | |
| Dec 2, 2020 at 22:19 | comment | added | Herr K. | @bymathformath: The interpretation of the derivative should be standard: If price is increased by $\$1$, then consumer surplus will decrease by (approximately) $\$D(p_0+1)$. This decrease in $CS$ can be visualized as the area of a rectangle at the bottom of the gray shaded area | |
| Dec 2, 2020 at 18:29 | comment | added | user31331 | @HerrK. Thanks a lot for the help. I am having trouble on how to intepret the derivative. It is the demand at $p_1$ but with reversed sign. What does that mean. | |
| Dec 2, 2020 at 15:19 | comment | added | Herr K. | @Bayesian: Good point. I guess we will also have to assume sufficient supply to meet the quantity demanded at $p_0$. | |
| Dec 2, 2020 at 12:08 | comment | added | Bayesian | But if the supplied quantity at that price is $S(p_0)=q_0<D(p_0)$, the CS would not simply be this triangle, but a smaller triangle $(A/a−D^{−1}(q_0))q_0/2$ plus a rectangle $q_0∗(D^{−1}(q_0)−S(p_0)$. | |
| Dec 2, 2020 at 2:15 | history | answered | Herr K. | CC BY-SA 4.0 |