Question

Refer to Figure: Supply and Demand Suppose the government imposes a tax of $6 on consumers. Which statement is correct?

	a.	Consumers will pay $16, the producer will receive $10, and total surplus decreases by $6.
	b.	Consumers will pay $14, the producer will receive $8, and total surplus decreases by $6.
	c.	Consumers will pay $14, the producer will receive $8, and total surplus decreases by $24.
	d.	Consumers will pay $16, the producer will receive $10, and total surplus decreases by $24. Price(P) 0 1 2 3 7 8 9 10 4 5 6 Quantity(Q) Refer to Figure: Supply and Demand Suppose the government imposes a tax of $6 on consumers. Which statement is correct? Consumers will pay $16, the producer will receive $10, and total surplus decreases by $6. a. Consumers will pay $14, the producer will receive $8, and total surplus decreases by $6. b. Consumers will pay $14, the producer will receive $8, and total surplus decreases by $24. Consumers will pay $16, the producer will receive $10, and total surplus decreases by $24.

Answer 1

- Price (P) 14 suppy 14B .. 5 a 1. 3. VOLE 5 Quantity (Q) afth taus price paid by buy ns = $.14 price received by Selles = $8 Now af te tau, atth tan, Quantity sold = 3 mits. Ance before tan consues suples = Area of A ADF ty base x height Laļ x (5-0) x (20-10) = $ 25 before tans produces smiplus = Area of a DFG = I x base X. height 2 Ž x (5-0) *(**) (10-5) = $75 $12.5 . - 2 Stotal suik dus before tan= (consmin suples t. produmsmples)

= $(257 1215)? $ 37.5 Abutu tau consmus simples Area of A ABE SEX (3-0) x (20-14) = $ 9 Attri dan, produces smple . Area of AHTO tx base x height 3 Zx(3-0) x (800!! = $ 4,5 Now at th dan 2.5-13.5) Tostal sim plus =46.974.5.) = $13.5 total smblas = $ 1:37.5-1 § 24 . Hence fall in total Smi el in Huce the answa will be? C: Consmess will pay $ 14, the produces will receive &8, and total suples decreasu by $24. Scanned with CamScanner