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 representing tax revenue. Next, use the green point (triangle symbol) to shade the area representing total consumer surplus after the law. 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. 300 200 Demand 210 133 Tax Wedge 150 120 90 Supply ED 30 a 140 303 After Tax 420 553 700 843 90 1123 120 1400 QUANTITY (Air conditioners www ONU DOM 1120 12 MA QUANTITY (Air conditioners) Tax Rever Consumer Surplu Producer Surplus Deadweight Lo 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. Consumer Surplus Producer Surplus Before Tax (Dollars) Tax Revenue Deadweight Loss 0 After Tax (Dollars) MacBook Pro Grade It Now Save & Continue Continue without saving
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 representing tax revenue. Next, use the green point (triangle symbol) to shade the area representing total consumer surplus after the law. 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. 300 200 Demand 210 133 Tax Wedge 150 120 90 Supply ED 30 a 140 303 After Tax 420 553 700 843 90 1123 120 1400 QUANTITY (Air conditioners www ONU DOM 1120 12 MA QUANTITY (Air conditioners) Tax Rever Consumer Surplu Producer Surplus Deadweight Lo 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. Consumer Surplus Producer Surplus Before Tax (Dollars) Tax Revenue Deadweight Loss 0 After Tax (Dollars) MacBook Pro Grade It Now Save & Continue Continue without saving
Chapter4: Markets In Action
Section: Chapter Questions
Problem 1SQP
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