Consider a market with a linear relatively Inelastic demand curve and a relatively Elastic linear Supply Curve draw such a market. Denote the Market Outcome as P* and Q* Suppose a tax is imposed on this market of size t. Draw and label this tax. Label the new output and price as Qt and Pt. What happens to consumer and producer surplus? Describe and then specifically shade (lightly with a pencil, highlighter, outline with a thick box boarder) in the NEW level of CONSUMER Surplus only on your graph.

Consider a market with a linear relatively Inelastic demand curve and a relatively Elastic linear Supply Curve draw such a market. Denote the Market Outcome as P* and Q* Suppose a tax is imposed on this market of size t. Draw and label this tax. Label the new output and price as Qt and Pt. What happens to consumer and producer surplus? Describe and then specifically shade (lightly with a pencil, highlighter, outline with a thick box boarder) in the NEW level of CONSUMER Surplus only on your graph.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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