PRICE (Dollars per scooter) First, use the black point (plus symbol) to indicate the equilibrium price and quantity of electric scooters 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. 300 270 Demand 240 210 180 150 120 90 Supply 60 30 30 0 Before Tax 0 140 280 420 560 700 840 980 1120 1260 1400 QUANTITY (Scooters) Equilibrium A Consumer Surplus Producer Surplus Suppose the government imposes an excise tax on electric scooters. The black line on the following graph shows the tax wedge created by a tax of $120 per scooter. 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 representing total producer cumplus after the tax. Finally, use the black point (plus symbol) to shade the area representing deadweight loss.
PRICE (Dollars per scooter) First, use the black point (plus symbol) to indicate the equilibrium price and quantity of electric scooters 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. 300 270 Demand 240 210 180 150 120 90 Supply 60 30 30 0 Before Tax 0 140 280 420 560 700 840 980 1120 1260 1400 QUANTITY (Scooters) Equilibrium A Consumer Surplus Producer Surplus Suppose the government imposes an excise tax on electric scooters. The black line on the following graph shows the tax wedge created by a tax of $120 per scooter. 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 representing total producer cumplus after the tax. Finally, use the black point (plus symbol) to shade the area representing deadweight loss.
Chapter4: Markets In Action
Section: Chapter Questions
Problem 1SQP
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