210 PRICE (Dollars per handbag). 180 Tax Wedge 150 120 90 00 60 60 30 Supply 0 0 20 40 60 80 100 120 140 160 180 200 QUANTITY (Handbags) A Consumer Surplus Producer Surplus Deadweight Loss Complete the following table by using the previous graphs to determine the values of consumer and producer surplus before the tax, and consumer surplus, producer surplus, tax revenue, and deadweight loss after the tax. Note: You can determine the areas of different portions of the graph by selecting the relevant area. Before Tax (Dollars) After Tax (Dollars) Consumer Surplus Producer Surplus Tax Revenue 0 Deadweight Loss 0 Consider the market for designer handbags. The following graph shows the demand and supply for designer handbags before the government imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of designer handbags 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. ? PRICE (Dollars per handbag) 300 270 Demand 240 210 180 150 120 90 Supply 60 30 0 Before Tax Equilibrium A Consumer Surplus Producer Surplus Cancer Create
210 PRICE (Dollars per handbag). 180 Tax Wedge 150 120 90 00 60 60 30 Supply 0 0 20 40 60 80 100 120 140 160 180 200 QUANTITY (Handbags) A Consumer Surplus Producer Surplus Deadweight Loss Complete the following table by using the previous graphs to determine the values of consumer and producer surplus before the tax, and consumer surplus, producer surplus, tax revenue, and deadweight loss after the tax. Note: You can determine the areas of different portions of the graph by selecting the relevant area. Before Tax (Dollars) After Tax (Dollars) Consumer Surplus Producer Surplus Tax Revenue 0 Deadweight Loss 0 Consider the market for designer handbags. The following graph shows the demand and supply for designer handbags before the government imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of designer handbags 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. ? PRICE (Dollars per handbag) 300 270 Demand 240 210 180 150 120 90 Supply 60 30 0 Before Tax Equilibrium A Consumer Surplus Producer Surplus Cancer Create
Chapter4: Markets In Action
Section: Chapter Questions
Problem 1SQP
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