The following graph represents the demand and supply for pinckneys (an imaginary product). The black point (plus symbol) indicates the pre-taxequilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario.DemandSupplyA14.00В11.00D E i8.0018QUANTITY (Pinckneys)PRICE (Dollars per pinckney) Complete the following table, given the information presented on the graph.ResultValuePer-unit taxEquilibrium quantity after taxPrice consumers pay after tax2$In the following table, indicate which areas on the previous graph correspond to each concept. Check all that apply.ConceptD.Producer surplus after the tax is imposedConsumer surplus after the tax is imposedTax revenue after the tax is imposedO O

The imposition of tax creates deadweight loss, which refers to a decline in total surplus due to market distortion. When the government imposes quantity tax, then it increases the price paid by buyers and reduces the price received by the seller.Per-unit tax=price paid by buyerafter tax-price received by seller after tax=14.00-8.00=$6.00imposition of tax shifts the supply curve to the left⇒equilibrium quanity after tax=12 unitsPrice consumers pay after tax=$14.00 Area of triangle F indicates the producer surplus after the imposition of tax. Consumer surplus after the tax is imposed is denoted by the area of triangle A. The total area of rectangle B and rectangle D indicates the tax revenue after the tax imposition.Hence, distortion due to tax imposition creates a deadweight loss in the market.

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Complete the following table, given the information presented on the graph. Result Value Per-unit tax Equilibrium quantity after tax Price consumers pay after tax 24 In the following table, indicate which areas on the previous graph correspond to each concept. Check all that apply. Concept A B D. E Producer surplus after the tax is imposed Consumer surplus after the tax is imposed Tax revenue after the tax is imposed

Complete the following table, given the information presented on the graph. Result Value Per-unit tax Equilibrium quantity after tax Price consumers pay after tax 24 In the following table, indicate which areas on the previous graph correspond to each concept. Check all that apply. Concept A B D. E Producer surplus after the tax is imposed Consumer surplus after the tax is imposed Tax revenue after the tax is imposed

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The following graph represents the demand and supply for pinckneys (an imaginary product). The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario. Demand Supply A 16, 18 21.00 18.00- D E 15.00 F 12 16 QUANTITY (Pinckneys) PRICE (Dollars per pinckney)
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