Given: QD = 160 -5P QS = -11 + 4P In addition, the government imposed a $3.00 tax on the buyer. Calculate the following (c) Consumer surplus after the tax. (d) Producer surplus after the tax. (e) Deadweight loss. (f) Government revenue

Given: QD = 160 -5P QS = -11 + 4P In addition, the government imposed a $3.00 tax on the buyer. Calculate the following (c) Consumer surplus after the tax. (d) Producer surplus after the tax. (e) Deadweight loss. (f) Government revenue

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter3: Market Demand And Supply

Section3.A: Consumer Surplus, Proudcer Suplus, And Market Efficency

Problem 6SQ

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Concept explainers

Total Surplus and Deadweight Loss

Economists generally define efficiency as when it is impossible to improve the situation of one party without imposing a cost on another. Conversely, if a situation gets inefficient, a party will benefit more than the other without imposing costs on others.

Question

Given:

QD = 160 -5P

QS = -11 + 4P

In addition, the government imposed a $3.00 tax on the buyer.

Calculate the following

(d) Producer surplus after the tax.

(e) Deadweight loss.

(f) Government revenue

Definition Definition Producer’s gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price and up to the equilibrium quantity.

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