2. Taxes and welfare Consider the market for designer purses. The following graph shows the demand and supply for designer purses before the governme taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of designer purses in the absence of a tax. Then point (triangle symbol) to shade the area representing total consumer surplus (cs) at the equilibrium price. Next, use the purple poin symbol) to shade the area representing total producer surplus (PS) at the equilibrium price. Before Tax Demand 200 180 Equilibrium 180 A 140 120 Consumer Surplus 100 Supply 80 Producer Surplus 60 40 20 10 20 30 40 50 60 70 80 90 100 QUANTITY (Purses) Suppose the government imposes an excise tax on designer purses. The black line on the following graph shows the tax wedge create per purse. First, use the tan quadrilateral (dash symbols) to shade the area representing tax revenue. Next, use the green point (triangle symbo area representing total consunmer surplus after the tax. Then, use the purple point (diamond symbol) to shade the area representingt PRICE (Dollars per purse)

2. Taxes and welfare Consider the market for designer purses. The following graph shows the demand and supply for designer purses before the governme taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of designer purses in the absence of a tax. Then point (triangle symbol) to shade the area representing total consumer surplus (cs) at the equilibrium price. Next, use the purple poin symbol) to shade the area representing total producer surplus (PS) at the equilibrium price. Before Tax Demand 200 180 Equilibrium 180 A 140 120 Consumer Surplus 100 Supply 80 Producer Surplus 60 40 20 10 20 30 40 50 60 70 80 90 100 QUANTITY (Purses) Suppose the government imposes an excise tax on designer purses. The black line on the following graph shows the tax wedge create per purse. First, use the tan quadrilateral (dash symbols) to shade the area representing tax revenue. Next, use the green point (triangle symbo area representing total consunmer surplus after the tax. Then, use the purple point (diamond symbol) to shade the area representingt PRICE (Dollars per purse)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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