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Producer Surplus Supply

Producer Surplus Supply

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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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 $40 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 representing total producer surplus after the tax, Finally, use the black point (plus symbol) to shade the area representing deadweight loss. After Tax 200 100 160 Tax Revenue Demand 140 120 Consumer Surplus 100 Tax Wedge Supply Producer Surplus 40 Deadweight Loss 20 60 100 150 200 210 300 0 400 40 s00 QUANTITY (Ues) ( ad a soe
Transcribed Image Text: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 $40 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 representing total producer surplus after the tax, Finally, use the black point (plus symbol) to shade the area representing deadweight loss. After Tax 200 100 160 Tax Revenue Demand 140 120 Consumer Surplus 100 Tax Wedge Supply Producer Surplus 40 Deadweight Loss 20 60 100 150 200 210 300 0 400 40 s00 QUANTITY (Ues) ( ad a soe
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 $40 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 representing total producer surplus after the tax. Finally, use the black point (plus symbol) to shade the area representing deadweight loss. (7) After Tax 200 100 Tax Revenue 160 Demand 140 120 Consumer Surplus 100 Tax Wedge Supply Producer Surplus 60 40 Deadweight Loss 20 60 100 150 200 250 300 30 400 4 s00 QUANTITY (Bkes) 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 After Tax (Dollars) (Dollars) Consumer Surplus Producer Surplus Tax Revenue Deadweight Loss
Transcribed Image Text: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 $40 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 representing total producer surplus after the tax. Finally, use the black point (plus symbol) to shade the area representing deadweight loss. (7) After Tax 200 100 Tax Revenue 160 Demand 140 120 Consumer Surplus 100 Tax Wedge Supply Producer Surplus 60 40 Deadweight Loss 20 60 100 150 200 250 300 30 400 4 s00 QUANTITY (Bkes) 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 After Tax (Dollars) (Dollars) Consumer Surplus Producer Surplus Tax Revenue Deadweight Loss
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