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In the following table, indicate which areas on the previous graph correspond to each concept. Check all that apply. Concept A B C D E F Producer surplus  after  the tax is imposed               Consumer surplus  after  the tax is imposed               Deadweight loss after the tax is imposed

In the following table, indicate which areas on the previous graph correspond to each concept. Check all that apply. Concept A B C D E F Producer surplus  after  the tax is imposed               Consumer surplus  after  the tax is imposed               Deadweight loss after the tax is imposed

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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In the following table, indicate which areas on the previous graph correspond to each concept. Check all that apply.
Concept
A
B
C
D
E
F
Producer surplus  after  the tax is imposed
 
 
 
 
 
 
  
Consumer surplus  after  the tax is imposed
 
 
 
 
 
 
  
Deadweight loss after the tax is imposed
The graph illustrates the demand and supply for pinckneys, an imaginary product. It shows the equilibrium before and after a tax is imposed. ### Graph Details: - **Axes**: - The vertical axis represents the "PRICE (Dollars per pinckney)." - The horizontal axis represents the "QUANTITY (Pinckneys)." - **Curves**: - The **demand curve** is depicted in blue, sloping downward. - The **supply curve** is depicted in orange, sloping upward. - **Equilibrium**: - The **initial equilibrium** is shown by the black point with a plus symbol, located at the intersection of the demand and supply curves. It occurs at a price of 18.00 dollars and a quantity of 16 pinckneys. - **Effects of Tax**: - The **new supply curve** (after tax) is not explicitly shown, but the effect is depicted by the shift in equilibrium. - **Grey points (star symbols)** represent the new positions: - Point C on the demand curve indicates the new quantity of 12 pinckneys at a price of 21.00 dollars. - Point E on the supply curve indicates the same quantity of 12 pinckneys at a price of 15.00 dollars. - **Areas**: - **A** (green area): Consumer surplus after tax. - **B** (beige area): Deadweight loss due to the tax. - **D** (purple area): Producer surplus before tax. - **F** (lavender area): Additional area indicating reduced producer surplus after tax. This graph demonstrates how a tax on pinckneys increases the price for consumers (from 18.00 to 21.00 dollars) and decreases the price received by producers (from 18.00 to 15.00 dollars), resulting in a reduced equilibrium quantity (from 16 to 12 pinckneys) and creating a deadweight loss represented by the area B.
Transcribed Image Text:The graph illustrates the demand and supply for pinckneys, an imaginary product. It shows the equilibrium before and after a tax is imposed. ### Graph Details: - **Axes**: - The vertical axis represents the "PRICE (Dollars per pinckney)." - The horizontal axis represents the "QUANTITY (Pinckneys)." - **Curves**: - The **demand curve** is depicted in blue, sloping downward. - The **supply curve** is depicted in orange, sloping upward. - **Equilibrium**: - The **initial equilibrium** is shown by the black point with a plus symbol, located at the intersection of the demand and supply curves. It occurs at a price of 18.00 dollars and a quantity of 16 pinckneys. - **Effects of Tax**: - The **new supply curve** (after tax) is not explicitly shown, but the effect is depicted by the shift in equilibrium. - **Grey points (star symbols)** represent the new positions: - Point C on the demand curve indicates the new quantity of 12 pinckneys at a price of 21.00 dollars. - Point E on the supply curve indicates the same quantity of 12 pinckneys at a price of 15.00 dollars. - **Areas**: - **A** (green area): Consumer surplus after tax. - **B** (beige area): Deadweight loss due to the tax. - **D** (purple area): Producer surplus before tax. - **F** (lavender area): Additional area indicating reduced producer surplus after tax. This graph demonstrates how a tax on pinckneys increases the price for consumers (from 18.00 to 21.00 dollars) and decreases the price received by producers (from 18.00 to 15.00 dollars), resulting in a reduced equilibrium quantity (from 16 to 12 pinckneys) and creating a deadweight loss represented by the area B.
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