Chapter 8

Taxes get the government revenue therefore it is necessary.
However, taxes make the market smaller.
The larger a tax, the less revenue received as the market becomes smaller.
The Laffer Curve shows that at first revenue increases, but as it continues to increase the revenue slowly becomes less and less.
Deadweight loss of taxation is the lost gains from trade because of tax making a smaller market.
More elastic curves result in a large deadweight loss.
Inelastic curves result in the opposite.
The reduction in consumer and producer surplus is often larger than tax revenue.