First, use the black point (plus symbol) to indicate the equilibrium price and quantity of commercial fans 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. (?) PRICE (Dollars perfan) 200 180 PRICE (Dollars per fan) 140 120 100 60 40 20 0 200 180 160 140 120 100 80 Suppose the government imposes an excise tax on commercial fans. The black line on the following graph shows the tax wedge created by a tax of $40 per fan. 60 Demand 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. 40 0 100 200 0 Demand Tax Wedge Before Tax Supply 300 400 500 600 700 800 900 1000 QUANTITY (Fans) Consumer Surplus Producer Surplus Tax Revenue 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Fans) Deadweight Loss After Tax Supply + Equilibrium A 0 0 Consumer Surplus After Tax (Dollars) Producer Surplus 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. Tax Revenue A Consumer Surplus Note: You can determine the areas of different portions of the graph by selecting the relevant area. Before Tax (Dollars) Producer Surplus Deadweight Loss (?)
First, use the black point (plus symbol) to indicate the equilibrium price and quantity of commercial fans 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. (?) PRICE (Dollars perfan) 200 180 PRICE (Dollars per fan) 140 120 100 60 40 20 0 200 180 160 140 120 100 80 Suppose the government imposes an excise tax on commercial fans. The black line on the following graph shows the tax wedge created by a tax of $40 per fan. 60 Demand 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. 40 0 100 200 0 Demand Tax Wedge Before Tax Supply 300 400 500 600 700 800 900 1000 QUANTITY (Fans) Consumer Surplus Producer Surplus Tax Revenue 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Fans) Deadweight Loss After Tax Supply + Equilibrium A 0 0 Consumer Surplus After Tax (Dollars) Producer Surplus 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. Tax Revenue A Consumer Surplus Note: You can determine the areas of different portions of the graph by selecting the relevant area. Before Tax (Dollars) Producer Surplus Deadweight Loss (?)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Consider the market for commercial fans. The following graph shows the demand and supply for commercial fans before the government imposes any taxes.
Transcribed Image Text:First, use the black point (plus symbol) to indicate the equilibrium price and quantity of commercial fans 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.
(?)
PRICE (Dollars perfan)
200
180
PRICE (Dollars per fan)
140
120
100
60
40
20
0
200
180
160
140
120
100
80
Suppose the government imposes an excise tax on commercial fans. The black line on the following graph shows the tax wedge created by a tax of
$40 per fan.
60
Demand
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.
40
0 100 200
0
Demand
Tax Wedge
Before Tax
Supply
300 400 500 600 700 800 900 1000
QUANTITY (Fans)
Consumer Surplus
Producer Surplus
Tax Revenue
0 100 200 300 400 500 600 700 800 900 1000
QUANTITY (Fans)
Deadweight Loss
After Tax
Supply
+
Equilibrium
A
0
0
Consumer Surplus
After Tax
(Dollars)
Producer Surplus
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.
Tax Revenue
A
Consumer Surplus
Note: You can determine the areas of different portions of the graph by selecting the relevant area.
Before Tax
(Dollars)
Producer Surplus
Deadweight Loss
(?)
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