a. What is the quantity of pizza bought and sold after the imposition of the tax? What is the price paid by consumers? What is the price received by producers? b. Calculate the consumer surplus and the producer surplus after the imposition of the tax. By how much has the imposition of the tax reduced consumer surplus? By how much has it reduced producer surplus? c. How much tax revenue does Collegetown earn from this tax? d. Calculate the deadweight loss from this tax.

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Chapter7: Consumers, Producers, And The Efficiency Of Markets
Section: Chapter Questions
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2. Consider the original market for pizza in Collegetown,
Price
Quantity
demanded supplied of
of pizza
Quantity
illustrated in the accompanying table. Collegetown officials
decide to impose an excise tax on pizza of $4 per pizza.
a. What is the quantity of pizza bought and sold after the
imposition of the tax? What is the price paid by
consumers? What is the price received by producers?
b. Calculate the consumer surplus and the producer surplus
after the imposition of the tax. By how much has the
imposition of the tax reduced consumer surplus? By how
much has it reduced producer surplus?
c. How much tax revenue does Collegetown earn from this
tax?
of
pizza
pizza
$10
9
1
5
8
2
4
7
3
3
4
2
5
5
1
4
d. Calculate the deadweight loss from this tax.
3
7
2
8
1
9
Transcribed Image Text:2. Consider the original market for pizza in Collegetown, Price Quantity demanded supplied of of pizza Quantity illustrated in the accompanying table. Collegetown officials decide to impose an excise tax on pizza of $4 per pizza. a. What is the quantity of pizza bought and sold after the imposition of the tax? What is the price paid by consumers? What is the price received by producers? b. Calculate the consumer surplus and the producer surplus after the imposition of the tax. By how much has the imposition of the tax reduced consumer surplus? By how much has it reduced producer surplus? c. How much tax revenue does Collegetown earn from this tax? of pizza pizza $10 9 1 5 8 2 4 7 3 3 4 2 5 5 1 4 d. Calculate the deadweight loss from this tax. 3 7 2 8 1 9
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