Microeconomics Week 6 Chapter 6 微观经济 教学课件.pptVIP

* * * * * * * Taxes and the inelasticity of “sinful” acts. If students understand the basics of taxes, they will become more informed citizen voters. Raise a number of provocative issues related to taxation to evoke student interest in understanding why some goods are taxed and others are not. Taxing the consumer surplus of smokers—“Once, Twice . . . Three times a levy.” Provoke the students’ interest in tax policy by showing them how cigarette smokers are “taxed” at least three times for their habit: Many believe that smoking is considered to be one of the most addictive, legally available products in the market without a doctor’s prescription. The government recognizes demand for cigarettes is highly inelastic and places a hefty sales tax on each pack of cigarettes. Strike one. Many governments have sued the major tobacco companies for compensation for past and future health care costs arising from the smoking-related illnesses of its citizens. Tobacco companies have recently settled these suits by paying hundreds of billions of dollars in penalties. Students should see that inelastic demand for cigarettes allows tobacco producers to pass on most of these costs to the smoker. (This could explain why the settlement has done little in the long run to depress the stock prices and dividends from these major tobacco companies, relative to the whole market.) Strike two. Due to the increased health risk of smoking, the average smoker dies at a much earlier age than the average non-smoker. This means that smokers can expect to receive little, if any, return on all the social security taxes they’ve been paying in throughout their lives. (That is, assuming any of us will get anything back for our social security taxes!) Strike three! * * * * * * * * * * * Explain that because landlords can’t be forced to supply a greater quantity than they wish, the quantity of housing supplied at the rent ceiling is less than the quantity that would be supplied in an unregulated market. *