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 $40per bike.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.After Tax200100160Tax RevenueDemand140120Consumer Surplus100Tax WedgeSupplyProducer Surplus40Deadweight Loss2060100150 200 210 3000 40040 s00QUANTITY (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 $40per bike.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.(7)After Tax200100Tax Revenue160Demand140120Consumer Surplus100Tax WedgeSupplyProducer Surplus6040Deadweight Loss2060100 150 200250 300 30 400 4 s00QUANTITY (Bkes)Complete 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.Before TaxAfter Tax(Dollars)(Dollars)Consumer SurplusProducer SurplusTax RevenueDeadweight Loss

*answer: When government imposes tax, price paid by buyers (Pb) increases and price received by…

Answered: Producer Surplus Supply

Business

Economics

Producer Surplus Supply

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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