1. Taxes and welfare PRICE (Dollars per air conditioner)40036032028024020016012080400DemandTax Wedge0 200 400Consumer SurplusProducer SurplusTax RevenueDeadweight LossAfter Tax600Supply800 1000 1200 1400 1600 1800 2000QUANTITY (Air conditioners)Before Tax(Dollars)00Tax RevenueAfter Tax(Dollars)Consumer SurplusComplete 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.Producer SurplusDeadweight Loss(? Consider the market for air conditioning units. The following graph shows the demand and supply for air conditioning units before the governmentimposes 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 thegreen point (triangle symbol) to shade the area representing total consumer surplus (CS) at the equilibrium price. Next, use the purple point (diamondsymbol) to shade the area representing total producer surplus (PS) at the equilibrium price.PRICE (Dollars per air conditioner)40036032028024020016012080400DemandBefore TaxSupply0 200 400 600 800 1000 1200 1400 1600 1800 2000QUANTITY (Air conditioners)EquilibriumAConsumer Surplus♦Producer SurplusSuppose the government imposes an excise tax on air conditioning units. The black line on the following graph shows the tax wedge created by a taxof $80 per air conditioner.First, 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 loss.

Consumer surplus is the difference between the amount the consumer is willing to pay and the amount…

PRICE (Dollars per air conditioner) 400 360 320 280 240 200 160 120 80 40 0 Demand Tax Wedge After Tax Supply 0 200 400 600 800 1000 1200 1400 1600 1800 2000 QUANTITY (Air conditioners) Consumer Surplus Producer Surplus Tax Revenue Deadweight Loss 0 0 Tax Revenue After Tax (Dollars) A Consumer Surplus ◇ Complete the following table by using the previous graphs to determine the values of consumer and producer surplus before the tax, and consumer surplus, 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 Tax (Dollars) Producer Surplus Deadweight Loss ?

PRICE (Dollars per air conditioner) 400 360 320 280 240 200 160 120 80 40 0 Demand Tax Wedge After Tax Supply 0 200 400 600 800 1000 1200 1400 1600 1800 2000 QUANTITY (Air conditioners) Consumer Surplus Producer Surplus Tax Revenue Deadweight Loss 0 0 Tax Revenue After Tax (Dollars) A Consumer Surplus ◇ Complete the following table by using the previous graphs to determine the values of consumer and producer surplus before the tax, and consumer surplus, 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 Tax (Dollars) Producer Surplus Deadweight Loss ?

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter4: Markets In Action

Section: Chapter Questions

Problem 1SQP

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Tips laxes and welfare Consider the market for air conditioning units. The following graph shows the demand and supply for air conditioning units before the government 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 graan point (triangle symbol) to shade the area representing total consumer surplus (CS) at the equilibrium price. Next, use the purple paint (diamond symbol) to shade the area representing total producer surplus (PS) at the equilibrium price. 8 8 8 8 8 2 3 2 : 30 Demand Supply Before Tax 140 200 450 590 700 340 80 1120 1200 1430 QUANTITY (Air conditioners +. Equilibrium A 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 $120 per air conditioner First, use the tan quadrilateral (desh symbols) to shade the area…
Consider the market for air conditioning units. The following graph shows the demand and supply for air conditioning units before the government 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. 360 Demand 320 280 K 240 200 160 Supply PRICE (Dollars per air conditioner) 400 120 PRICE (Dollars per air conditioner) 80 40 0 400 360 320 280 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 $160 per air conditioner. First, use the tan quadrilateral (dash symbols) to shade the area representing tax revenue. Next, use the green point…
Consider the market for mountain bikes. The following graph shows the demand and supply for mountain bikes before the government imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of mountain bikes 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. (screen shot 1) Suppose the government imposes an excise tax on mountain bikes. The black line on the following graph shows the tax wedge created by a tax of $80 per bike. First, use the tan quadrilateral (dash symbols) to shade the area representing tax revenue. Next, use the green point (triangle symbol) to shade the area representing total consumer surplus after the tax. Then, use the purple point (diamond symbol) to shade the area…
16 14- 12 으 10 8 6 6 2 Price, $ ○ 10 20 30 40 S 50 60 70 D > 80 90 Q
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The demand and supply equations for a product are: Q= 300 — 6P and Q.= -40 + 6P. Determine the market equilibrium and draw graphs. Suppose that the government decides to impose a flat tax of 10% on each unit sold. Show that the price that consumers pay would be the same if the government imposed a tax of Rs. 1.70 per unit sold. Draw graphs and Also calculate the total revenue earned by sellers before and after the tax, the tax revenue raised by the government, changes in consumer and producer surplus, and deadweight loss.
Price per unit ($) The diagram to the right is a basic supply and demand graph. Economists use it to analyze equilibrium price and quantity in a market. 10 00 When price equals $8, a surplus occurs. 9.00- 1.) Using the line drawing tool, draw a horizontal line from the $8 value on the vertical axis to represent the surplus Label this line 8.00- "Price 7.00- 2) Using the point drawing tool, locate quantity demanded (label the point P,) and quantity supplied (label the point P,) at this price of $8 6.00- Carefully follow the instructions above and only draw the required objects. 5.00 4.00- 3.00- 2.00 1.00- onal 0.00- 10 70 80 Quantity per unit of time 20 30 40 50 60 90 100
Suppose a tax is levied in the market for soda. Consider a $0.50 excise tax on producers for each soda sold. The graph illustrates the demand and supply curves for soda both before and after the tax is levied. Use the graph below to answer the remaining parts of this question. SEE GRAPH d. What is the consumer surplus generated after the imposition of the tax? Shade in this area on the graph. Instructions: Use the tool provided “CStax” to illustrate this area on the graph. Consumer surplus after the imposition of the tax is $ _____ thousand. e. What is the producer surplus generated after the imposition of the tax? Shade in this area on the graph. Instructions: Use the tool provided “PStax” to illustrate this area on the graph. Producer surplus after the imposition of the tax is $ _____ thousand. f. What is the total revenue generated from the tax? Shade in this area on the graph. Instructions: Use the tool provided “TR” to illustrate this area on the graph. Tax…
Consider the market for designer handbags. The following graph shows the demand and supply for designer handbags before the government imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of designer handbags 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 handbag) 300 270 Demand 240 210 180 150 120 90 Supply 60 30 0 Before Tax Equilibrium A Consumer Surplus Producer Surplus Cancer Create
Consider the market for designer handbags. The following graph shows the demand and supply for designer handbags before the government imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of designer handbags 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 handbag) 100 90 80 70 60 50 40 30 20 10 0 0 Demand Supply Before Tax 160 3:20 480 640 800 960 1120 1280 1440 1600 QUANTITY (Handbags) + Equilibrium Consumer Surplus Producer Surplus
Suppose that at the equilibrium price of $50, the equilibrium quantity is 400 units and consumer surplus is $8,000. If the equilibrium price falls to $40 and the equilibrium quantity increased to 450 units then consumer surplus increases by $4,500. Is this true? Show all the calculations