The demand curve gives the total amount of a good that buyers would want to buy at each price. The supply curve gives the total amount of a good that suppliers would want to sell at each possible price. It follows that , at the competitive equilibrium price, the demand curve has to intersect the supply curve. Revenue is the amount of money that someone receives in a transaction. Expenditure is the amount of money that someone pays out in a transaction.
Profit is revenue minus expenditure.
In our textbook, consumer surplus is equal to buyers' profit. We calculate expected effects of changed market conditions on quantity and price, by looking at the supply and demand curves that apply before and after the changes. Find the new equilibrium price and quantity and compare them to the initial equilibrium price and quantity. You have learned how a sale tax shifts the supply curve and demand curve. who will bear the cost of a sales tax. Reason for the excess burden is that a sales tax reduces profits of buyers and sellers by more than the amount of money that the government collects is that the tax prevents some trades that would be profitable for both buyer and seller in the absence of the tax.