Question

levying a tax of $100 per unit on The qovernment is consid suppliers of either leather jackets ór smartphones. The supply curve for each of these two goods is identical, as each of the following graphs. The demand for leather jackets is shown by Di (on the first graph), and the demand for smartphones is shown by Ds (on the second graph) Suppose the government taxes leather jackets. The followin graph shows the annual supply and demand for this good ol tohe prop tseup(s io per ackt).shited up by the amount of the proposed tax ($100 per jacket On the followina graph, use the green rectangle (triangle symbols) to shãde the area that represents tax revenue for éather jackets. Then use the black triangle (plus symbols) to shade th with the tax. e area that represents the diweight loss associated Instead, suppose the government taxes smart The llowing graph shows the annual supply and demand for this ood, aš Well as the supply curve shifted up by the amount of proposed tax ($100 per phone). On the follo did previously on the graph for leather jackets. Use the gréen rectangle triangle symbols) to shade the area that represents tax revenue for smartphonés. Then, use the black tniangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax. wing graph, do for sma the same thing you Complete the following table with the tax revenue collected and deadweight loss caused by each of the tax proposals. Dealyeight If t Vehue per Smartphones at $100 per p Suppose the government wants to tax the good that will generate more tax revenue at a lower welfäre cost. In this case it should tax because, all else held constant, taxing elastic demand generates larger a good with a relatively tax revenue and smaller deadweight loss.

Answer 1

Smartphones Market Leather Jackets Market Tax Revenue S+Tax Tax Revenue 160 1e0 Deadweight Loss Deadweight Loss 100 100 40 0 60 100 10 200 20 300 30 400 4D 500 550 60D QUANTITY (Phones) 0 50 00 150 200 250 300 350 400 450 500 550 00 QUANTITY (Jackes) ax revenue 15000 30000 Deadweight Loss 10000 2500 leather jackets Smart phones Fillups 1) smart phones 2) Less