CIVETEVIA ( www 2. Taxes and welfare Consider the market for electric scooters. The following graph shows the demand and supply for electric scooters before the government imposes any First, use the black point (plus symbol) to indicate the equilibrium price and quantity of electric scooters 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. PRICE (Dollars per scoo 340 320 290 240 100 120 40 0 PRICE (Dollars per scooter) 0 20 40 Show Transcribed Text 400 300 320 240 200 Demand 160 Suppose the government imposes an excise tax on electric scooters. The black line on the following graph shows the tax wedge created by a tax of $80 per scooter NO 40 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. ? @ Before Tax Demand Supply 80 QUANTITY (Scooters) Tax Wedge 0 20 4060 After Tax Equilibrium A Supply 80 100 100 130 140 160 180 200 QUANTITY (Scooters) Consumer Surplus ♦ Producer Surplus Tax Revenue A Consumer Surplus ? Producer Surplus Deadweight Loss
CIVETEVIA ( www 2. Taxes and welfare Consider the market for electric scooters. The following graph shows the demand and supply for electric scooters before the government imposes any First, use the black point (plus symbol) to indicate the equilibrium price and quantity of electric scooters 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. PRICE (Dollars per scoo 340 320 290 240 100 120 40 0 PRICE (Dollars per scooter) 0 20 40 Show Transcribed Text 400 300 320 240 200 Demand 160 Suppose the government imposes an excise tax on electric scooters. The black line on the following graph shows the tax wedge created by a tax of $80 per scooter NO 40 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. ? @ Before Tax Demand Supply 80 QUANTITY (Scooters) Tax Wedge 0 20 4060 After Tax Equilibrium A Supply 80 100 100 130 140 160 180 200 QUANTITY (Scooters) Consumer Surplus ♦ Producer Surplus Tax Revenue A Consumer Surplus ? Producer Surplus Deadweight Loss
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:TIVITEITA TO
2. Taxes and welfare
Consider the market for electric scooters. The following graph shows the demand and supply for electric scooters before the government imposes any
taxes.
First, use the black point (plus symbol) to indicate the equilibrium price and quantity of electric scooters 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.
PRICE (Dollars per
400
360
320
280
240
200
160
120
80
40
0
PRICE (Dollars per scooter)
0 20 40
400
360
Show Transcribed Text
320
200
240
200
160
120
80
Demand
40
Suppose the government imposes an excise tax on electric scooters. The black line on the following graph shows the tax wedge created by a tax of
$80 per scooter.
0
First, use the tan quadrilateral (dash symbols) to shade the area representing tax revenue. Next, use the green point (triangle symbol) 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.
0
60
Demand
Before Tax
Supply
Tax Wedge
20 40
80 100 120 140 160
QUANTITY (Scooters)
160 180 200
After Tax
3
Supply
•+
Equilibrium
60 80 100 120 140 160 180 200
QUANTITY (Scooters)
A
Consumer Surplus
Producer Surplus
Tax Revenue
A
Consumer Surplus
Producer Surplus
Deadweight Loss
Transcribed Image Text:PRICE (Dollars per sco
240
200
100
120
80
40
O
0
Tax Wedge
20
Supply
Consumer Surplus
Producer Surplus
Tax Revenue
Deadweight Loss
40 60 80
100 120 140 100 180 200
QUANTITY (Scooters)
Before Tax
(Dollars)
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.
0
0
Consumer Surplus
After Tax
(Dollars)
◇
Producer Surplus
Deadweight Loss
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