The market supply and demand for a product are shown in the diagram below.Is the price elasticity of supply less than one, equal to one, or greater than one? Explain.Calculate consumer surplus at the equilibrium price. Show your work.Now suppose the government imposes a per-unit tax of $1 on producers.What happens to total revenue received by producers after they pay the tax to the government? Explain.Will producer surplus increase, decrease, or stay the same?Will total surplus increase, decrease, or stay the same? Explain. $10$6- SupplyDemand80200 QUANTITYPRICE

Since you posted multiple questions, we will provide the answer for first three questions.

Answered: $10 $6 - Supply Demand 80 200 QUANTITY…

Business

Economics

$10 $6 - Supply Demand 80 200 QUANTITY PRICE

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter3: Market Demand And Supply

Section3.7: A Market Supply And Demand Analysis

Problem 1GE

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Question

The market supply and demand for a product are shown in the diagram below.

Is the price elasticity of supply less than one, equal to one, or greater than one? Explain.
Calculate consumer surplus at the equilibrium price. Show your work.
Now suppose the government imposes a per-unit tax of $1 on producers.
1. What happens to total revenue received by producers after they pay the tax to the government? Explain.
2. Will producer surplus increase, decrease, or stay the same?
3. Will total surplus increase, decrease, or stay the same? Explain.

$10
$6
- Supply
Demand
80
200 QUANTITY
PRICE

Consumer’s gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price and up to the equilibrium quantity. Consumer surplus is represented by area A.

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