90 Excise Tax (0- $20) 0.00 80 $81.00 70 Demand Relatively Elastic 60 Perfectly Inelastic 50 Relatively Elestic 40 Supply $36.00 30 Less Perfectly Elastik Elastic Relatively Elastic 20 10 CALCULATIONS 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 Quantity (thousands per week) Price Paid Quantity No Tax $50.00 4,000 Burden on the Consumer Burden on Tax Revenue Welfare Loss the Producer (Deadiveight Loss) With Tax $50.00 4,000 Tex Paid Tax Paid Instructions: Adjust the sliders so that the vertical intercept of the supply curve is $36.00 and the vertical intercept is $81.00 for the demand curve. Assume there is initially no tax, and that a $8.00 tax is being proposed by policymakers. Report all answers to two decimai places. a) Calculate the total amount of surplus that consumers would lose if the tax was implemented. $ b) Calculate the total amount of surplus that producers would lose if the tax was implemented. $ C) How much of the total losses for consumers and producers are recovered as government tax revenue? $ d) is there any surplus lost by either consumers or producers that is not recovered as revenue? yes

90 Excise Tax (0- $20) 0.00 80 $81.00 70 Demand Relatively Elastic 60 Perfectly Inelastic 50 Relatively Elestic 40 Supply $36.00 30 Less Perfectly Elastik Elastic Relatively Elastic 20 10 CALCULATIONS 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 Quantity (thousands per week) Price Paid Quantity No Tax $50.00 4,000 Burden on the Consumer Burden on Tax Revenue Welfare Loss the Producer (Deadiveight Loss) With Tax $50.00 4,000 Tex Paid Tax Paid Instructions: Adjust the sliders so that the vertical intercept of the supply curve is $36.00 and the vertical intercept is $81.00 for the demand curve. Assume there is initially no tax, and that a $8.00 tax is being proposed by policymakers. Report all answers to two decimai places. a) Calculate the total amount of surplus that consumers would lose if the tax was implemented. $ b) Calculate the total amount of surplus that producers would lose if the tax was implemented. $ C) How much of the total losses for consumers and producers are recovered as government tax revenue? $ d) is there any surplus lost by either consumers or producers that is not recovered as revenue? yes

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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