Class 39: The economic incidence of supply and demand changes

Today, Mr Rizzo talks about the application of economic incidence of supply and demand changes in terms of taxation. Tax is actually neutral because it's actually a form of transfer of money. For excise tax, the burden will still be on the buyers more than on the sellers when the graph shifts. He also talks about drugs and illegal stuff and its application. When drug is illegal, the cost is actually higher because we spend more money on the enforcement of the law, but the money can be spend on something even more beneficial. Besides, the marginal cost for people to commit crime becomes lower and it actually leads to unintended consequences: the increases of violent crimes rate.