Certainly! Here's a transcription of the text along with an explanation of the graph:---**2. Taxes and Welfare**Consider the market for designer purses. The following graph shows the demand and supply for designer purses before the government imposes any 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 use the green point (triangle symbol) to shade the area representing total consumer surplus (CS) at the equilibrium price. Next, use the purple point (diamond symbol) to shade the area representing total producer surplus (PS) at the equilibrium price.**Graph Description:**- The graph is titled "Before Tax."- It shows the relationship between price (in dollars per purse) on the vertical axis and quantity (in purses) on the horizontal axis.- The blue line represents the demand curve, which slopes downward, indicating that as price decreases, the quantity demanded increases.- The orange line represents the supply curve, which slopes upward, indicating that as price increases, the quantity supplied increases.- The equilibrium is marked by a black plus symbol where the demand and supply curves intersect.- The area above the price and below the demand curve represents the consumer surplus, marked with a green triangle symbol.- The area below the price and above the supply curve represents the producer surplus, marked with a purple diamond symbol.Suppose the government imposes an excise tax on designer purses. The black line on the following graph shows the tax wedge created by a tax of $20 per purse.--- This explanation provides a detailed understanding of the graph dynamics and the economic concepts involved before tax imposition. **Instructions:**First, use the tan quadrilateral (dash symbols) to shade the area representing tax revenue. Next, use the green point (triangle symbol) to shade the area representing total consumer surplus after the tax. Then, use the purple point (diamond symbol) to shade the area representing total producer surplus after the tax. Finally, use the black point (plus symbol) to shade the area representing deadweight loss.**Graph Explanation:**The graph titled "After Tax" depicts supply and demand curves with the following details:- **Axes:** - The vertical axis represents "PRICE (Dollars per purse)." - The horizontal axis represents "QUANTITY (Purses)."- **Lines:** - The demand curve is a downward-sloping line from left to right. - The supply curve is an upward-sloping line intersecting the demand curve. - A vertical line indicates the "Tax Wedge" between supply and demand.- **Legends:** - **Tax Revenue** is represented by a tan quadrilateral symbol. - **Consumer Surplus** is marked by a green triangle symbol. - **Producer Surplus** is marked by a purple diamond symbol. - **Deadweight Loss** is represented by a black plus symbol.**Task:**Complete the table by using the previous graph to determine the values of consumer and producer surplus before the tax, and consumer surplus, producer surplus, tax revenue, and deadweight loss after the tax.**Table:**| | Before Tax (Dollars) | After Tax (Dollars) ||----------------------|----------------------|---------------------|| Consumer Surplus | | || Producer Surplus | | || Tax Revenue | 0 | || Deadweight Loss | 0 | |**Note:** You can determine the areas of different portions of the graph by selecting the relevant area.

The point of intersection of the demand and supply curve is called the equilibrium point. The price…

area representing total consumer surplus after the tax. Then, use the purple point (diamond symbol) to shade the area representing total producer surplus after the tax. Finally, use the black point (plus symbol) to shade the area representing deadweight loss. PRICE (Dollars per purse) 50 45 40 35 30 Tax Wedge 25 20 5 10 5 Demand 0 0 80 160 Consumer Surplus Producer Surplus Tax Revenue Supply Deadweight Loss After Tax 240 320 400 480 560 640 720 800 QUANTITY (Purses) Before Tax (Dollars) 0 0 Tax Revenue Complete the following table by using the previous graphs to determine the values of consumer and producer surplus before the tax, and consumer surplus, producer surplus, tax revenue, and deadweight loss after the tax. Note: You can determine the areas of different portions of the graph by selecting the relevant area. After Tax (Dollars) A Consumer Surplus ducer Surplus Deadweight Loss ?

area representing total consumer surplus after the tax. Then, use the purple point (diamond symbol) to shade the area representing total producer surplus after the tax. Finally, use the black point (plus symbol) to shade the area representing deadweight loss. PRICE (Dollars per purse) 50 45 40 35 30 Tax Wedge 25 20 5 10 5 Demand 0 0 80 160 Consumer Surplus Producer Surplus Tax Revenue Supply Deadweight Loss After Tax 240 320 400 480 560 640 720 800 QUANTITY (Purses) Before Tax (Dollars) 0 0 Tax Revenue Complete the following table by using the previous graphs to determine the values of consumer and producer surplus before the tax, and consumer surplus, producer surplus, tax revenue, and deadweight loss after the tax. Note: You can determine the areas of different portions of the graph by selecting the relevant area. After Tax (Dollars) A Consumer Surplus ducer Surplus Deadweight Loss ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.