Taxing of goods is a practice applied to every purchase and every item sold. It is a way for the producer, seller or government to have a supervised earning market of that good. Goods can range from the smallest item of ice cream to a larger item like a house or car. No matter if it is purchased or sold it is taxed. Key points for discussion are how these taxes affect supply and demand or even the equilibrium price and quantity of those goods. And why are some of the taxes charged only to the consumer where as others are only for the producer.
For example, the taxation for sandwich purchases has been implemented by the local city council. It is a $.25 cent purchase tax for each purchased within the city limit. It seems that taxing sandwiches would not affect the supply of those sandwiches for sellers as they have the same motivation to supply and sell. Instead it shifts the demand of sandwiches to the buyer because they have to pay the tax for purchasing it and the cost of purchasing it to the seller. This taxation causes a transfer in the demand curve for sandwiches, thus creating fewer purchases of sandwiches. Furthermore the tax impact then passes to the sellers, who by decreasing the cost for a sandwich in order keep their revenue elevating impacts the equilibrium price and quantity. Once fewer purchases are made the impact of the tax is shown in the equilibrium price and equilibrium quantity. The seller is forced to lower their cost for purchase to buyers. This greatly impacts them as a producer for the product. The tax may not be directly applied to them, but impacts them regardless. In turn having fewer sandwiches purchased generates a fall in the sandwiches initial equilibrium, because of this fall it creates a new equilibrium and reduc ...