ResultValuePer-unit tax Equilibrium quantity after tax Price consumers pay after tax ### Supply and Demand Graph for PinckneysThis graph illustrates the demand and supply for pinckneys, an imaginary product. The graph is structured with the price (in dollars per pinckney) on the vertical axis and quantity (in pinckneys) on the horizontal axis.#### Key Elements:- **Demand Curve**: Represented by the blue line, sloping downwards from left to right, indicating that as price decreases, quantity demanded increases.- **Supply Curve**: Represented by the orange line, sloping upwards from left to right, indicating that as price increases, quantity supplied increases.- **Equilibrium Point**: The black point (marked with a plus symbol) where the supply and demand curves intersect, indicating the market equilibrium before any tax is imposed.- **Price and Quantity at Equilibrium**: At equilibrium, the price is $18.00, and the quantity is 16 pinckneys.#### Impact of Tax:- **New Price and Quantity**: Due to the imposition of a tax, the equilibrium shifts: - **Consumer Price**: Increases to $21.00 - **Producer Price**: Decreases to $15.00 - **New Quantity**: Reduces to 12 pinckneys#### Areas on the Graph:- **Area A**: Loss in consumer surplus due to the tax.- **Area B**: Tax revenue generated by the government.- **Area C**: Deadweight loss due to reduced transactions.- **Area D**: Remaining consumer surplus.- **Area E**: Remaining producer surplus.- **Area F**: Loss in producer surplus due to the tax.The grey points (star symbols) indicate the shifts in price and quantity at the new equilibrium after tax implementation. The graph clearly visualizes the impact of the tax on both consumers and producers, demonstrating the changes in surplus and deadweight loss.

Per unit tax is a specific tax which has to be paid for each unit of goods and services sold. From…

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Per-unit tax Equilibrium quantity after tax Price consumers pay after tax

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Result	Value

Per-unit tax
Equilibrium quantity after tax
Price consumers pay after tax

### Supply and Demand Graph for Pinckneys

This graph illustrates the demand and supply for pinckneys, an imaginary product. The graph is structured with the price (in dollars per pinckney) on the vertical axis and quantity (in pinckneys) on the horizontal axis.

#### Key Elements:

- **Demand Curve**: Represented by the blue line, sloping downwards from left to right, indicating that as price decreases, quantity demanded increases.
- **Supply Curve**: Represented by the orange line, sloping upwards from left to right, indicating that as price increases, quantity supplied increases.
- **Equilibrium Point**: The black point (marked with a plus symbol) where the supply and demand curves intersect, indicating the market equilibrium before any tax is imposed.
- **Price and Quantity at Equilibrium**: At equilibrium, the price is $18.00, and the quantity is 16 pinckneys.

#### Impact of Tax:

- **New Price and Quantity**: Due to the imposition of a tax, the equilibrium shifts:
- **Consumer Price**: Increases to $21.00
- **Producer Price**: Decreases to $15.00
- **New Quantity**: Reduces to 12 pinckneys

#### Areas on the Graph:

- **Area A**: Loss in consumer surplus due to the tax.
- **Area B**: Tax revenue generated by the government.
- **Area C**: Deadweight loss due to reduced transactions.
- **Area D**: Remaining consumer surplus.
- **Area E**: Remaining producer surplus.
- **Area F**: Loss in producer surplus due to the tax.

The grey points (star symbols) indicate the shifts in price and quantity at the new equilibrium after tax implementation. The graph clearly visualizes the impact of the tax on both consumers and producers, demonstrating the changes in surplus and deadweight loss.

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