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Hey Sally do you know how much profit you are losing to taxes?
No but I would love to hear more about it in my office lets go, we can pick up a bag of popcorn on the way.
How much money will I lose if this price raise from taxes lowers the demand of my tickets?
So whenever the government changes the tax rate you and your customers both pay a part of the taxes.
As you can see the demand curve will go down showing you have less business. and you will be paying more of the taxes.
So what you are saying is that if there is a tax on soda, I would be paying more of the tax would I lose a profit?
Yes you would pay more of the tax, you would also be cutting into you profit margin.
What would happen if the good was elastic? Like blood for you.
let us go into your office and see.
Let us go find some nontaxed blood.
The supply of blood would decrease making to blood tax on the consumer, so I the consumer would have to pay more for blood.
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