Taxation: Most of us are familiar with taxes. The typical consumer pays a variety of taxes either directly or indirectly. Common types of taxes include: sales taxes, excise taxes, income taxes, property taxes, and user fees.

Our purpose here is to study the effect of taxes in a simple supply and demand setting. We'll look at how they affect consumer and producer behavior, the incidence of taxation (who actually pays or benefits) and the effect on consumer and producer surplus.

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