imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of air conditioning units 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 air conditioner) 400 360 320 280 240 200 160 120 80 40 0 Demand 0 100 Before Tax Supply 200 300 400 500 600 700 800 900 1000 QUANTITY (Air conditioners) Equilibrium Consumer Surplus Producer Surplus ? Suppose the government imposes an excise tax on air conditioning units. The black line on the following graph shows the tax wedge created by a tax of $80 per air conditioner.

imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of air conditioning units 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 air conditioner) 400 360 320 280 240 200 160 120 80 40 0 Demand 0 100 Before Tax Supply 200 300 400 500 600 700 800 900 1000 QUANTITY (Air conditioners) Equilibrium Consumer Surplus Producer Surplus ? Suppose the government imposes an excise tax on air conditioning units. The black line on the following graph shows the tax wedge created by a tax of $80 per air conditioner.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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