The following graph represents the demand and supply for an imaginary good called a pinckney. The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario.
Complete the following table, given the information presented on the graph.
Price producers receive before tax _______
Per-unit tax _______
Equilibrium quantity before tax _______
In the following table, indicate which of the previous graph's areas corresponds to each concept. Check all that apply.
Concept
Producer surplus before the tax is imposed
Deadweight loss after the tax is imposed
Consumer surplus after the tax is imposed
Price producers receive before tax = $ 5
Per unit tax = $ 4 (=$7-$3)
Equilibrium Quantity before tax = 20
Producer surplus before tax = D + E + F
Deadweight loss after tax is imposed = C + E
Consumer Surplus after tax = A
Additional,
Consumer Surplus before tax = A + B + C
Producer surplus after tax = F
Tax collection (after tax is imposed) = B + C
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a.
Per-unit tax: $4.00
Equilibrium quantity before tax: $12.00
Price consumers pay before tax: $5.00
Before the tax is implemented, the equilibrium price and quantity occur at the intersection of the demand and the supply curves. Therefore, the price consumers pay and producers receive before the tax must be $5.00, and the equilibrium quantity of pinckneys is 12.
After the tax is paid, the top grey star ($7.00) indicates the price consumers pay, whereas the bottom star ($3.00) indicates the price sellers receive. Because the per-unit tax must be the difference between these two prices, it is equal to $7.00-$3.00=$4.00. In other words, the tax of $4.00 per unit drives a wedge between the price paid by consumers and received by sellers. This, in turn, decreases the equilibrium quantity from 12 to 6 pinckneys.
Notice that the net result is the same, regardless of whether the tax is levied on consumers or producers: Consumers pay $7.00 per unit, and producers receive $3.00 after the tax is paid to the government. The only difference is what price is paid in the store, often called the retail price. If the tax is levied on producers, the retail price is $7.00 per unit because the producers will have to send the $4.00 per unit to the government. If it's levied on consumers, the retail price is $3.00 per unit because the consumers have the responsibility of paying the tax.b.
Concept | A | B | C | D | E | F | |
---|---|---|---|---|---|---|---|
Producer surplus after the tax is imposed | |||||||
Deadweight loss after the tax is imposed | |||||||
Consumer surplus before the tax is imposed |
Concept | Before Tax | After Tax |
---|---|---|
Consumer Surplus | A | |
Producer Surplus | F | |
Tax Revenue | N/A | |
Deadweight Loss | N/A |
The following graph represents the demand and supply for an imaginary good called a pinckney.
The following graph represents the demand and supply for an
imaginary good called a pinckney. The black point (plus symbol)
indicates the pre-tax equilibrium. Suppose the government has just
decided to impose a tax on this market; the grey points (star
symbol) indicate the after-tax scenario.
Complete the following table, given the information presented on
the graph.
Result
Value
Per-unit tax rate
Equilibrium quantity
before tax
Price consumers pay
after tax
In the following table, indicate which of the previous...
1. Understanding the implications of taxes on welfare The following graph represents the demand and supply for an imaginary good called a pinckney. The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario. Complete the following table, given the information presented on the graph. Price producers receive after tax _______ Per-unit tax _______ Equilibrium quantity after tax _______ In the following table, indicate which of...
1. Understanding the implications of taxes on welfare The following graph represents the demand and supply for an imaginary good called a pinckney. The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario Demand Supply 28.00 24.00 20.00 QUANTITY (Pinckneys) Complete the following table, given the information presented on the graph Result Equilibrium quantity after tax Price producers receive...
1. Understanding the implications of taxes on welfare The following graph represents the demand and supply for an imaginary good called a pinckney. The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario. Sueply 3.50 QUANTITY (Pinckneys) Complete the following table, given the information presented on the graph. Result Value Price preducers receive after tax S Equibrium quantity before...
The
following graph represents the demand and supply for an imaginary
good called a pinckney. The black point (plus symbol) indicates the
pre-tax equilibrium. Suppose the government just decided to impose
a tax on this market; the grey points (star symbol) indicates the
after-tax scenario.
omework (Ch 08) Due Today at 11:59 PM CST The following graph represents the demand and supply for an imaginary good called a pinckney. The black point (plus symbol) Indicates the pre-tax equllibrium. Suppose the...
The following graph represents the demand and supply for pinckneys (an imaginary product). The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario.Complete the following table, given the information presented on the graph. ResultValuePrice consumers pay before tax Per-unit tax Equilibrium quantity before tax In the following table, indicate which areas on the previous graph correspond to each concept. Check all that apply.ConceptABCDEF Consumer...
The following graph represents the demand and supply for pinckneys (an imaginary product). The black point (plus symbol) Indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) Indicate the after-tax scenario.Complete the following table, given the information presented on the graph. ResultValuePrice consumers pay before tax Per-unit tax Equilibrium quantity before tax In the following table, indicate which areas on the previous graph correspond to each concept. Check all that apply.ConceptABCDEF Consumer...
The following graph represents the demand and supply for an imaginary good called a pinckney. The black point (plus symbol) indicates'the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario.
Understanding the implications of taxes on welfare The following graph represents the demand and supply for an imaginary good called a pinckney. The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario.
1. Understanding the implications of taxes on welfare The following graph represents the demand and supply for pinckneys (an imaginary product). The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario. Demand Supply 6.50 PRICE {Dolars per pinckney) 8 QUANTITY (Pinckneys) Complete the following table, given the information presented on the graph. Result Value Per-unit tax Price consumers pay...