(a) The area of consumer surplus and producer surplus .

Question

The graph accompanying this question shows a market in which the government has imposed an excise tax of $60 on producers. (a) What quantity will be sold in the market? (b) What price will consumers pay in the market? (c) By how much will consumer surplus change as a result of the tax? (d) By how much will the producer surplus change as a result of the tax? (e) How much revenue will the government collect from this excise tax? (1) Calculate the deadweight loss created by the tax. Price $120 $90 $30 0 1,000 2.000 3,000 Quantity

Answer 1

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 7, Problem 9P

To determine

(a)

The area of consumer surplus and producer surplus.

To determine

(b)

The area of consumer surplus and producer surplus if the $T tax is imposed.

To determine

(c)

The deadweight cost of the tax.

To determine

(d)

The tax revenue which is raised from the tax.

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The graph accompanying this question shows a market in which the government has imposed an excise tax of $60 on producers. (a) What quantity will be sold in the market? (b) What price will consumers pay in the market? (c) By how much will consumer surplus change as a result of the tax? (d) By how much will the producer surplus change as a result of the tax? (e) How much revenue will the government collect from this excise tax? (1) Calculate the deadweight loss created by the tax. Price $120 $90 $30 0 1,000 2.000 3,000 Quantity

Assume competitive markets (prices are given) and that the demand is more elastic than supply. Which of the following statements is correct? A. We do not have sufficient information to infer which surplus is greater B. Consumer surplus will be larger than producer surplustyping C. Consumer surplus will be exactly the same as producer surplus D. Consumer surplus will be smaller than producer surplus. Give typing answer with explanation and conclusion

Use the graph to answer the following question: Which of the following statements is most true? A) Producers will pay the entire tax. B) Consumers will pay 1/3 of the tax. C) Producers will pay 1/3 of the tax. D) Consumers will pay the entire tax.

Answer 2

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 7, Problem 9P

To determine

(a)

The area of consumer surplus and producer surplus.

To determine

(b)

The area of consumer surplus and producer surplus if the $T tax is imposed.

To determine

(c)

The deadweight cost of the tax.

To determine

(d)

The tax revenue which is raised from the tax.

Expert Solution & Answer

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Answer 3

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 7, Problem 9P

To determine

(a)

The area of consumer surplus and producer surplus.

To determine

(b)

The area of consumer surplus and producer surplus if the $T tax is imposed.

To determine

(c)

The deadweight cost of the tax.

To determine

(d)

The tax revenue which is raised from the tax.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 4

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 7, Problem 9P

To determine