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 0 Deadweight Loss 0
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 0 Deadweight Loss 0
Chapter4: Markets In Action
Section: Chapter Questions
Problem 1SQP
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Question
100%
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 | 0 |
|
| Deadweight Loss | 0 |
|
Transcribed Image Text:Suppose the government imposes an excise tax on electric scooters. The black line on the following graph shows the tax wedge created by a tax of
$120 per scooter.
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.
PRICE (Dollars per scooter)
300
270
240
210
180 Tax Wedge
150
120
90
60
30
0
Demand
0
140
280
Supply
After Tax
420 560 700 840 980
QUANTITY (Scooters)
1120 1260 1400
Tax Revenue
A
Consumer Surplus
Producer Surplus
Deadweight Loss
?
Transcribed Image Text:Consider the market for electric scooters. The following graph shows the demand and supply for electric scooters before the government imposes any
taxes.
First, use the black point (plus symbol) to indicate the equilibrium price and quantity of electric scooters in the absence of a tax. Then use the green
point (triangle symbol) to shade the area representing total consumer surplus (CS) at the equilibrium price. Next, use the purple point (diamond
symbol) to shade the area representing total producer surplus (PS) at the equilibrium price.
300
270
Demand
240
210
17
180
150
120
Supply
PRICE (Dollars per scooter)
90
60
30
0
0
140
Before Tax
280
420 560 700 840 980 1120 1260 1400
QUANTITY (Scooters)
++
Equilibrium
Δ
Consumer Surplus
Producer Surplus
?
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