On the following graph, do for bucket hats the same thing you did previously on the graph for windbreakers. Use the green rectangle (trianglesymbols) to shade the area that represents tax revenue for bucket hats. Then, use the black triangle (plus symbols) to shade the area that representsthe deadweight loss associated with the tax.PRICE (Dollars per hat)PRICE (Dolla60SupplyS+Tax4035XDe50 100 150 200 250 300 350 400 450 500 550 600QUANTITY (Hats)5550451510025201510Bucket Hats Market5De00 50 100 150 200 250 300 350 400 450 500 550 600QUANTITY (Hats)If the Government Taxes...Windbreakers at $25 per windbreakerBucket hats at $25 per hatTax RevenueDeadweight Loss?Complete the following table with the tax revenue collected and deadweight loss caused by each of the tax proposals.Tax Revenue(Dollars)Deadweight Loss(Dollars)Suppose the government wants to tax the good that will generate more tax revenue at a lower welfare cost. In this case, it should taxbecause, all else held constant, taxing a good with a relatively,elastic demand generates larger tax revenue andsmaller deadweight loss. 3. Relationship between tax revenues, deadweight loss, and demand elasticityThe government is considering levying a tax of $25 per unit on suppliers of either windbreakers or bucket hats. The supply curve for each of these twogoods is identical, as you can see on each of the following graphs. The demand for windbreakers is shown by Dw (on the first graph), and thedemand for bucket hats is shown by Da (on the second graph).Suppose the government taxes windbreakers. The following graph shows the annual supply and demand for this good. It also shows the supply curve(S+Taz) shifted up by the amount of the proposed tax ($25 per windbreaker).On the following graph, use the green rectangle (triangle symbols) to shade the area that represents tax revenue for windbreakers. Then use theblack triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax127S+Taxbreaker)Gayajapum ja3324#*R*222555045Windbreakers MarketS5349SupplyWindbreakers MarketS+TaxSupplyDw00 50 100 150 200 250 300 350 400 450 500 550 600QUANTITY (Windbreakers)Tax RevenueDeadweight LossInstead, suppose the government taxes bucket hats. The following graph shows the annual supply and demand for this good, as well as the supplycurve shifted up by the amount of the proposed tax ($25 per hat).

Question

Accepted Answer

An excise tax when collected from sellers shifts the supply curve upward by the amount of the tax.…