Consider the market for designer purses. The following graph shows the demand and supply for designer purses before the government imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of designer purses 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. Before Tax 45 Demand Equibrium 40 35 Consumer Surplus 30 25 20 Producer Surplus 15 Supply 10 160 240 320 400 480 560 640 720 00 QUANTITY (Purses) PRICE (Dollars per purse)
Consider the market for designer purses. The following graph shows the demand and supply for designer purses before the government imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of designer purses 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. Before Tax 45 Demand Equibrium 40 35 Consumer Surplus 30 25 20 Producer Surplus 15 Supply 10 160 240 320 400 480 560 640 720 00 QUANTITY (Purses) PRICE (Dollars per purse)
Chapter4: Markets In Action
Section: Chapter Questions
Problem 1SQP
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micro question 7
![](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F16c4ad1d-99ba-4c13-be0a-c902432782ae%2Fef4bf0d6-76f6-4605-9412-f661bc2a39d3%2Fibuicex.png&w=3840&q=75)
![Consider the market for designer purses. The following graph shows the demand and supply for designer purses before the government imposes any
taxes.
First, use the black point (plus symbol) to indicate the equilibrium price and quantity of designer purses 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.
Before Tax
45
Demand
Equibrium
40
35
Consumer Surplus
30
25
20
Producer Surplus
15
Supply
10
160
240
320 400 480
560
640
720 00
QUANTITY (Purses)
PRICE (Dollars per purse)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F16c4ad1d-99ba-4c13-be0a-c902432782ae%2Fef4bf0d6-76f6-4605-9412-f661bc2a39d3%2Fsr6dw9.png&w=3840&q=75)
Transcribed Image Text:Consider the market for designer purses. The following graph shows the demand and supply for designer purses before the government imposes any
taxes.
First, use the black point (plus symbol) to indicate the equilibrium price and quantity of designer purses 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.
Before Tax
45
Demand
Equibrium
40
35
Consumer Surplus
30
25
20
Producer Surplus
15
Supply
10
160
240
320 400 480
560
640
720 00
QUANTITY (Purses)
PRICE (Dollars per purse)
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