Suppose the equation for the demand curve for some product X is P = 8 − 0.6Q and the supply curve is P = 2 + 0.4Q. What are the equilibrium price and quantity? Now suppose an excise tax is imposed on X such that the new supply equation is P = 4 + 0.4Q. How much tax revenue will this excise tax yield the government? Graph the curves, and label the area of the graph that represents the tax collection “TC” and the area that represents the efficiency loss of the tax “EL.” Briefly explain why area EL is the efficiency loss of the tax but TC is not.

1. Taxes and Efficiency Suppose the government is thinking about levying a per-unit tax of $30 on firms supplying either sweatpants or glasses. The supply curves for both of the two goods are identical, as given by the following graphs. The demand for sweatpants is given by DSDS (on the first graph), and the demand for glasses is given by DGDG (on the second graph). Suppose the government decides to tax sweatpants. The following graph plots the yearly demand and supply for this good. It also plots another supply curve (S+TaxS+Tax) shifted upward by the proposed tax amount ($30 per pair). On the following graph, use the green rectangle (triangle symbols) to shade the area that represents tax revenue for sweatpants. Then use the black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax.   Sweatpants MarketTax RevenueDeadweight Loss050100150200250300350400450500550600605550454035302520151050PRICE (Dollars per pair)QUANTITY…

The government is considering levying a tax of $120 per unit on suppliers of either leather jackets or smartphones. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for leather jackets is shown by DLDL (on the first graph), and the demand for smartphones is shown by DSDS (on the second graph). Suppose the government taxes leather jackets. The following graph shows the annual supply and demand for this good. It also shows the supply curve (S+TaxS+Tax) shifted up by the amount of the proposed tax ($120 per jacket). On the following graph, use the green rectangle (triangle symbols) to shade the area that represents tax revenue for leather jackets. Then use the black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax.   Instead, suppose the government taxes smartphones. The following graph shows the annual supply and demand for this good, as well as the supply curve…

To raise money for a new student union, the Student Snack 2.25 Bar charges a tax of $0.75 on each beverage. In the graph, Demand (500, $2.00) 2.00 the original demand curve for beverages is labeled (700, $1.75) 1.75 "Demand" and the shifted demand curve, which accounts for 1.50 the tax, is labeled "Shifted Demand." Use this graph to Shifted demand (500, S1.25) 1.25 answer the questions. Answer to the nearest cent. 00 For each soda, how much of the tax does the Student Snack 0.75 Bar pay? 0.50- Supply 0.25 1.75 100 200 300 400 500 600 700 800 900 Quantity For each beverage, how much of the tax do students pay? 1.75 ($) aoud