10 Airplane Tickets40035030025020015010050255075100 125A.Compute CS and PS surplus in a market for airplane tickets without a tax.CS = SPS = SAssume the government adds a tax of $100 per ticket to sellers of airplane tickets.• Draw the new supply curve on the graph above, and draw the tax wedge. Label the pricebuyers pay (Pn), price sellers receive (Ps), and the area of deadweight loss (DWL) when thetax is in place.В.What is the price that buyers will pay after the tax? SHow much money will the sellers of tickets make per ticket after the tax? SWhat is the new quantity in the market?What is the new CS? SWhat is the new PS? $How much total money will be paid to the government in Tax Revenue? $What is the TS in this market? SHow much DWL will occur when the tax is applied? S

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Airplane Tickets 400 350 300 250 200 150 100 50 25 50 75 100 125 A. Compute CS and PS surplus in a market for airplane tickets without a tax. CS =S PS = $

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Airplane Tickets
400
350
300
250
200
150
100
50
25
50
75
100 125
A.
Compute CS and PS surplus in a market for airplane tickets without a tax.
CS = S
PS = S
Assume the government adds a tax of $100 per ticket to sellers of airplane tickets.
• Draw the new supply curve on the graph above, and draw the tax wedge. Label the price
buyers pay (Pn), price sellers receive (Ps), and the area of deadweight loss (DWL) when the
tax is in place.
В.
What is the price that buyers will pay after the tax? S
How much money will the sellers of tickets make per ticket after the tax? S
What is the new quantity in the market?
What is the new CS? S
What is the new PS? $
How much total money will be paid to the government in Tax Revenue? $
What is the TS in this market? S
How much DWL will occur when the tax is applied? S

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