## Government-Imposed Tax on Market Equilibrium### Graph Analysis of After-Tax Market EquilibriumThis graph depicts the effects of a government-imposed tax on a market, showing the shifts in supply and demand curves. The labeled points and areas represent critical components of the market dynamics:1. **Axes**: - The vertical axis represents the **Price (Dollars per blinkie)**. - The horizontal axis represents the **Quantity (Blinkies)**.2. **Curves**: - The **Demand** curve slopes downward from left to right, indicating that as the price decreases, the quantity demanded increases. - The **Supply** curve slopes upward from left to right, indicating that as the price increases, the quantity supplied increases.3. **Equilibrium Points**: - The **pre-tax equilibrium** is where the original supply and demand curves intersect. - The **after-tax equilibrium** points are indicated by grey star symbols. These denote the new intersection points of the supply and demand curves after a tax has been placed on the market.4. **Price Changes**: - **Pre-tax Equilibrium Price**: This original intersection sets the price and quantity without any tax intervention. - **Post-tax Price to Buyers** is reflected at point B (about $22.00). - **Post-tax Price to Sellers** is reflected at point E (about $14.00). 5. **Quantity Changes**: - **Pre-tax Quantity** is at the initial intersection of supply and demand curves. - **Post-tax Quantity** decreases to the new equilibrium (about 28 units).6. **Areas**: - **A and F (Consumer and Producer Surplus Lost)**: These areas may represent the deadweight loss due to the tax, which is the loss of total surplus that results from the tax. - **B and D (Consumer and Producer Surplus with Tax)**: These areas indicate the remaining consumer and producer surplus after the tax. - **C (Tax Revenue)**: This area represents the government's tax revenue derived from the tax imposed on each unit sold.### Instructions:Complete the following table using the information extracted and interpreted from the graph.---This detailed analysis should help students understand the impact of government-imposed taxes on market equilibrium, highlighting the shifts and changes in price, quantity, and welfare within the market. ### Understanding the Impact of Taxation on Market Equilibrium#### IntroductionThis section aims to help students understand the changes in market equilibrium and welfare distribution due to the imposition of a tax, using graphical representation and data tables.---#### Graph ExplanationThe provided graph depicts the market for "Blinkies" with the quantity on the x-axis and price on the y-axis. Key points illustrated are:- **Equilibrium Quantity Before Tax:** Initially, the market equilibrium quantity is shown at 36 units of Blinkies.- **Quantity Change After Tax:** With the imposition of tax, the quantity decreases to 28 units.The graph illustrates areas representing various economic concepts such as consumer surplus, producer surplus, and deadweight loss.---#### Data Table CompletionStudents should use the graph to fill in the following table:**Results Table**| Result | Value ||---------------------------------------|-------------------------|| Price consumers pay after tax | \_\_\_\_\_\_\_\_\_\_\_ || Per-unit tax | \_\_\_\_\_\_\_\_\_\_\_ || Equilibrium quantity before tax | \_\_\_\_\_\_\_\_\_\_\_ |---#### Economic Impact AnalysisIn the subsequent table, match the correct areas on the graph to the relevant economic concept based on their locations and shapes on the graph.**Concept Identification Table**| Concept | A | B | C | D | E | F ||----------------------------------------------|------|------|------|------|------|------|| Deadweight loss after the tax is imposed | ☐ | ☐ | ☐ | ☐ | ☐ | ☐ || Producer surplus after the tax is imposed | ☐ | ☐ | ☐ | ☐ | ☐ | ☐ || Consumer surplus before the tax is imposed | ☐ | ☐ | ☐ | ☐ | ☐ | ☐ |---#### Detailed Concept Explanation- **Deadweight Loss After Tax:** Represents the lost welfare because taxes create a gap between the price consumers pay and the price producers receive, leading to a reduction in the traded quantity.- **Producer Surplus After Tax:** The difference between what producers are willing to accept and what they actually receive after the tax is imposed.- **

Consumer surplus is the area above the market price and below the demand curve upto quantity…

Complete the following table, given the information presented on the graph. Result Price consumers pay after tax Per-unit tax Equilibrium quantity before tax $ 999 Value In the following table, indicate which areas on the previous graph correspond to each concept. Check Concept Deadweight loss after the tax is imposed Producer surplus after the tax is imposed Consumer surplus before the tax is imposed A 00 C 0 D E 00 MacBook Pro F 000 C

Complete the following table, given the information presented on the graph. Result Price consumers pay after tax Per-unit tax Equilibrium quantity before tax $ 999 Value In the following table, indicate which areas on the previous graph correspond to each concept. Check Concept Deadweight loss after the tax is imposed Producer surplus after the tax is imposed Consumer surplus before the tax is imposed A 00 C 0 D E 00 MacBook Pro F 000 C

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Calculate the consumer surplus Calculate the producer surplus before the tax
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