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Taxation and dead weight loss | Microeconomics | Khan Academy

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The effect of taxation on the equilibrium price and quantity Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/microeconomics/consumer-producer-surplus/deadweight-loss-tutorial/v/percentage-tax-on-hamburgers?utm_source=YT&utm_medium=Desc&utm_campaign=microeconomics Missed the previous lesson? https://www.khanacademy.org/economics-finance-domain/microeconomics/consumer-producer-surplus/deadweight-loss-tutorial/v/minimum-wage-and-price-floors?utm_source=YT&utm_medium=Desc&utm_campaign=microeconomics Microeconomics on Khan Academy: Topics covered in a traditional college level introductory microeconomics course About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy's Microeconomics channel: https://www.youtube.com/channel/UC_6zQ54DjQJdLodwsxAsdZg Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy
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Text Comments (71)
Soham D'Souza (3 months ago)
Why has demand curve not shifted?
Lucus Liew (4 months ago)
Great video. Now I know how they tax us for their poc*et
Maz Dela Cerna (6 months ago)
Massive love!! <3
Sugatsu (8 months ago)
im about to report about taxation and dead weight loss and this helps me alot. thank you
Robert Trevino (10 months ago)
I owe so much of my life to you... you have helped me pass soo many classes!
Ilham Surya (11 months ago)
terimakasih :)
Steven Colome (1 year ago)
Why does the producer surplus decrease in price. They raise they're prices, should the only producer decrease be in quantity?
S. Inan (1 year ago)
less burgers are now being produced because they won't get the minimum price they want. the surplus from those units are going away. producers also need to pay tax. they cant keep it so the surplus is below the orange line.
Tiffany Joelyo (1 year ago)
this video is very helpful thank you sir
Tiffany Joelyo (1 year ago)
this video is very helpful thank you sir
Everywhere is Home (1 year ago)
Really good explanation. Thank you so much for sharing the knowledge!
Matheus Melo (1 year ago)
Taxation is theft...
Emily Galen (1 year ago)
thank you so much for these!!!!!!!!!!!!!
pureinhart (1 year ago)
#millions of Hamburgers per day.....Dead 'weight-loss'..... Harberger's triangles..... I see what you did there Sal! I am not fat!
Nicole Lea Moseman (1 year ago)
Cheeseburgers are drop dead gorgeous!
Dean Davis (2 years ago)
I would love to see how tariff taxation is calculated. I feel like this method should consider the nation we are responsible for. Say money taxed is value saved by another form of tax times the number of people within the nation they exchange with "pay". People are looking at economic efficiency, without considering the lost wages from being out of competitive balance. Lost wages we must make up for in another form of taxation.
Rich Ovejero (2 years ago)
This video explained how taxes mess up consumerism
Kinza Ahmed (2 years ago)
This was great!
SANDEEP SAPKOTA (2 years ago)
Great
Keith Allen (2 years ago)
ITS NOT
Flacko (2 years ago)
"All hamburgers are created equally....which we know is not true" I swear ive heard something similar to this before :/ huh
boat-dog (2 years ago)
tattoo spit ir!
WaleFit (3 years ago)
Great information! Thanks for sharing this
Timothy Ko (3 years ago)
made it easy for me to understand!
Rajit Sachdeva (3 years ago)
I just want a hamburger now
markd315 (3 years ago)
+Magicstaa According to wikipedia: "Khan attended the Massachusetts Institute of Technology, graduating with a Bachelor of Science in mathematics, a Bachelor of Science in electrical engineering and computer science, and a Master of Science in electrical engineering and computer science in 1998.[7] Khan was class president in his senior year.[8] Khan also holds a Master of Business Administration from Harvard Business School.[9][10]"
Cruz Gonzalez (1 year ago)
Kind of amazing how he turned his love for education in learning into such a big and helpful business
Laure K (3 years ago)
Thank you so much for making all of these videos! 
Bacontree (4 years ago)
Your handwriting distracts me. How can it be so neat?! And you're writing with a computer mouse?
Bacontree (3 years ago)
Yeah I finally figured it out after seeing someone work on one of those for animation slides OTL thought he was some sort of handwriting god
Wiz (3 years ago)
+RitardxSJ He's using a graphics tablet. ;)
Alan Wasson (4 years ago)
To pay off their debt? haha..Sal...your funny...that's a good one.
sainzvivi (4 years ago)
thank you
Lauris Skraucis (4 years ago)
soo the producers surplus is the profit?
caetano brito (2 years ago)
yes
Vilhelmo De Okcidento (4 years ago)
+itzdLandStupid3taxit The efficiency of a Land Value Tax is shared with the taxation of all forms Economic Rent.
Nik Tavakolian (3 years ago)
Yeah I promoted the land value tax before it was cool, in fact, I was the one who popularized it. 
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MrM0MO (4 years ago)
HAHAHA! the video title says "dead weight loss" meaning the lose of the surplus, but all these auto typers or bots or whatever you call them think its about human weight lose. I haven't laughed this hard for a while...who knew it would be in an econ video.
HumanRights4Everyone (5 years ago)
Have you done a video on Land Value Tax?
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Chris Johnson (5 years ago)
Ahh you're too good! Thankyou
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Kalla Ag Oumar (5 years ago)
"We are just assuming that all Hamburgers were created equal" - Emancipation Proclamation for Hamburgers. LOL.
gocrazy432 (5 years ago)
What you're missing is that this is just a model. Sure there's economies of scale but you're not taking into account marginal benefits. As you get closer to full capacity and over your workers might get in each other way. Eventually it would be better to increase capacity by getting new land and more workers, but they might have a better marginal benefit else where in society.
hummerh40 (6 years ago)
thank you Sal! :)
jackuy12345 (6 years ago)
lol if the government doesnt get revenue how does the country gonna be operating?
Guilherme Pöttker (6 years ago)
It would be nice if he did a video on each school of though: keynesian, monetarist, austrian, supply-side, etc. and compared them...
Guilherme Pöttker (6 years ago)
I don't want to force you into a hard political question, but how should taxation take place, in your opinion? How high should taxes be? Should it be a progressive of flat income tax, or a consumption tax? [...] Of course, if you don't want to answer such a polemical issue such as these, you are free not to do it....
FortNikitaBullion (6 years ago)
Do a video on supply-side economics
TxFw (6 years ago)
How to keep your people down? Tax them to death.
TxFw (6 years ago)
How to keep your people down? Tax them to death. That'll do the trick.
TxFw (6 years ago)
No more dead weight! We don't need it! Can't pay for school, can't pay for gas, insurance is ridiculous - the best income I can get can't keep up! Guess we'll all just live @ home for the next 10 years till we can pay for it all.
itzdLandStupid3taxit (6 years ago)
Good presentation. There is ONE tax that causes no dead weight loss and that is a tax on land/site values as the supply curve is fixed, the landowners can not pass it on. Hence a tax on land has not only no dead weight loss it actually forces owners of vacant and speculative land to either do something with it or leave it to someone who will use it productively. v=TTiVS2lhMuY or chekc out landvaluetax dot org & wealthandwant dot com
a2m4m60 (6 years ago)
Taxation is good. Its the governments job to protect the transactions of all demanders and suppliers and it needs revenue from somewhere so yes it is ok for the government to tax. haha but then the question of how much "protection" needs to be placed to protect the transactions and protection comes in the form of stable currency, laws, "pro growth tax", ease in starting a business,few barriers to business, respect for property rights... not price setting as some people assume.
QuickSilverD (6 years ago)
@khanacademy Do you feel confortable sharing your own opinion on whenever the US Goverment do, taxes and spends too little or too much?
luftwaffle (6 years ago)
Khan, great video although I'd say one thing - I think what the "dead weight loss" means is really important and perhaps glossed over. I think that the conventional view is that a tax is just money that would have gone to the company going to the government instead. But it's worse than that - the dead weight loss is actually wealth that could have been created which is instead just vaporized. So the net wealth of the whole system is deteriorated, not just reallocated... you know what I mean.
Khan Academy (6 years ago)
@QuickSilverD I do believe that the government does need revenue and does need to tax. The harder question is how much revenue as a % of GDP and where it is best used.
Gonçalo Aguiar (6 years ago)
@kuzzlenuzzle My point on this being misleading is that simplifies things that are far complex to be just explained with a graph and two almost linear lines. At the eyes of people with bad intentions they will argue that taxation is wrong, because sincerely I don't think the agenda of this video is other that that. Taxes need to exist if you want to have a working government. Where the money is or is not used, that's other story.
dannyledwith21 (6 years ago)
@QuickSilverD i think this is just an objective observation of the effect of taxes on the economy. i'd be surprised if khan was a raging anarchist.
QuickSilverD (6 years ago)
Does Khan thinks that it is a good thing or not that the goverment gets revenue?
Bryn Walsh (6 years ago)
@T0B0KKE The only difference is that the gap between the old supply and the new supply gets bigger as you increase the price, rather than running parallel to it. It's not misleading, and for teaching purposes it's perfectly acceptable to suspend reality. Besides, lots of countries DO have taxes on goods. They may not be sales taxes in name, but in effect to the consumer they are. Tariffs, any kind of fee at all for producing a good is basically the same thing.
Bryn Walsh (6 years ago)
@Magicstaaa I should think other people submit scripts.
Gonçalo Aguiar (6 years ago)
Since when there are fixed taxes on consumption? VAT is taxed with a % of the consumed good or service price... This is a bit misleading theory.

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