Detailed Diagrams - Indirect Tax

If you're like me and you love the logic and intuition of Economics diagrams, going the extra mile and 'dissecting' a diagram into its components is a joy rather than a complexity and unnecessary faff. Striving the get out the maximum detail from diagrams is also a great way to differentiate the class and to work out who your real stars are. The indirect tax diagram, besides the usual analysis has plenty to offer. Take a risk go through the whole lot for a lesson, your students will love you for it and will no doubt be intrigued. The beauty of Economics right here in this video!

Many teachers go for the costs of production focus, the increase in price and reduction in quantity. The additional analysis of government tax revenue, producer burden and consumer burden is also often done. But the 'extras' of producer revenue and deadweight loss is also a nice addition to analysis, allowing students to consider why taxes are placed in the first place and the dilemmas governments must face whilst deciding whether or not to impose an indirect tax.

A good extension exercise for students would be to get them to change the elasticity of demand and work out how the stakeholder impacts would vary.