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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 $160 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.

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 $160 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.

Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Design Of The Tax System
Section: Chapter Questions
Problem 4CQQ
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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 $160 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) 400 360 320 280 240 Tax Wedge 200 160 120 80 40 0 Demand 0 120 240 Supply After Tax 360 480 600 720 840 960 QUANTITY (Scooters) 1080 1200 Tax Revenue Consumer Surplus Producer Surplus Deadweight Loss ?
Transcribed Image Text:PRICE (Dollars per scooter) 400 360 320 280 240 Tax Wedge 200 160 120 80 40 0 Demand 0 120 240 Supply After Tax 360 480 600 720 840 960 QUANTITY (Scooters) 1080 1200 Tax Revenue Consumer Surplus Producer Surplus Deadweight Loss ?
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