Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question 3 please
Transcribed Image Text:Answer the following questions in your own words. Start a new thread while replying.
23
1. What is the relationship between the tax size and tax revenue? What will happen to the
tax revenue if the government increases the tax size from a small to medium size and
from a medium to large size?
2. What is the relationship between tax size and deadweight loss. What happens to the
deadweight loss if the tax size is tripled?
3. Refer to the figure below:
48
44
Supply
40
36
32
28
24
20
16
12
4
Demand
5 10 15 20 25 30 35 40 45 50 55 60
QUANTITY
In the above figure, assume that the government imposes a tax size of AB. Based on this
information calculate the following in dollar amount. Make sure to show all the math.
a. Tax revenue as a result of tax
b. Deadweight loss as a result of the tax.
c. Loss to the consumer who left the market after tax.
d. Loss to the producer who left the market after tax.
e. Loss to the existing buyers after tax.
f. Loss to the existing sellers after tax.
Please refer to the discussion board requirement announcement before posting. First post due
on Thursday, April 22nd, and reply to two other student's posts due on Sunday, April 25th.
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