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(2) Using the following graph, derive the formula for the excess buxden, given by e-P-Q-42 (HINT: start from the formula for the area of interest)
(2) Using the following graph, derive the formula for the excess buxden, given by e-P-Q-42 (HINT: start from the formula for the area of interest) Price per pound of barey (1 + 4) PH Tax revenues Excess burden of the ex P D. Pounds et barley per your Where == the price elasticity of demand P= the price level: Q = the output level t = the tax rate (10 marks) (b) Using the formula for the excess burden, explain why it is better to tax many commodities at a lower rate than to tax a few commodities at a higher rate. (2) Using the following graph, derive the formula for the excess buxden, given by e-P-Q-42 (HINT: start from the formula for the area of interest) Price per pound of barey (1 + 4) PH Tax revenues Excess burden of the ex P D. Pounds et barley per your Where == the price elasticity of demand P= the price level: Q = the output level t = the tax rate (10 marks) (b) Using the formula for the excess burden, explain why it is better to tax many commodities at a lower rate than to tax a few commodities at a higher rate
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