Consider the market for designer purses. The following graph shows the demand and supply for designer purses before the government imposes anytaxesFirst, 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 greenpoint (triangle symbol) to shade the area representing total consumer surplus (CS) at the equilibrium price. Next, use the purple poinit (diamondsymbol) to shade the area representing total producer surplus (PS) at the equilibrium price.Before Tax150135Equilbrium120DemandConsumer Surplus90Producer SurplusSupply452034000 10 2004 s 100 120PRICE (Delars per pue) Suppose the govermment imposes an excise tax on designer purses. The black line on the folowing graph shows the tax wedge created by a tax of$30 per purseFirst, use the tan quadrilateral (dash symbols) to shade the area representing tax revenue. Next, use the green point (triangle symbol) to shade thearea representing total consumer surplus after the tax. Then, use the purple point (diamond symbol) to shade the area representing total producersurplus after the tax. Finally, use the black point (plus symbol) to shade the area representing deadweight loss2)After Tax150135Tax Revenue120Demand100Consumer SurplustoTax WedgeProducer BurplusSupply4530Deadwight Loes20000Producer SurplusSupply4530Deadweight Loss1520406080100120 140 M60 100 200QUANTITY (Purses)Complete the following table by using the previous graphs to determine the values of consumer and producer surplus before the tax, and consumersurplus, 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.Before TaxAfter Tax(Dollars)(Dollars)Consumer SurplusProducer SurplusTax RevenueDeadweight LossPRICE (

At equilibrium, demand = supply. Consumer surplus is the area above the price and below the demand…

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 poinit (diamond symbol) to shade the area representing total producer surplus (PS) at the equilibrium price. Before Tax 150 135 Equilbrium 120 Demand 90 Consumer Surplus Producer Surplus Supply 45 20 4 s 100 120 340 100 160 200 (end ed oal 3d

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 poinit (diamond symbol) to shade the area representing total producer surplus (PS) at the equilibrium price. Before Tax 150 135 Equilbrium 120 Demand 90 Consumer Surplus Producer Surplus Supply 45 20 4 s 100 120 340 100 160 200 (end ed oal 3d

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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What is total surplus? How is it illustrated on a demand and supply diagram?
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Hello. My question has to do with this equation: A market has a demand equation as follows: Qd = 100 –2P. The market price for the product is $20. Calculate the dollar amount of consumer surplus in this market and illustrate your answer graphically. I believe I understand how to calculate the equation. I would replace P with $20 and the equation would become 100 - 2 (20) = Qd. Then 100-40 = $60. So, I think I have the correct answer as $60, but I am not sure how to illustrate it graphically. I also know that the (total) consumer surplus is defined as the shaded area beneath the demand curve and above the price. I believe I should show this $60 as an answer under a triangle, but I don't know how.
Step 1: Draw a supply-and-demand diagram. Price is on the vertical axis, quantity is on the horizontal axis, demand is downward-sloping, supply is upward- sloping, and be sure to label equilibrium price and equilibrium quantity.
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Solve it correctly