Question

12. After the 15% tax on Producers is imposed, the Deadweight or Welfare Loss to the economy will be: a. $0.14 billion. b. $0.98 billion. c. $2.22 billion. d. $2.36 billion. e. $3.95 billion

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question (8) $ 1.92*707 = $14.784 Consumers spend on Product inaustry revenue = Ps= 1064*707= 12.628 $12.63 Ans: (e) $10.784 and $ 12.63 billion question (9) Consumer Surfiue 3.22 CS 1.92 .64 PS 0.61 0 7070 12.15 CS = 1 / 2 (3-22-9-92) (7070) = 4098 billion (c) que hion (10) PS = 1 (a 1.64-0.61) (707) 3.95 billion. 2 Ans: (C) 3.95 billion.

Answer 1

Answer - Option C

$ 2.2 billion

Deadweight loss = Area of rectangle between CS and PS.

Tax per unit = 1.92 * 15 %

= 0.288

Units produced = 7.7 billion

Deadweight loss = 7.7 * 0.288

= $ 2.2 billion

Hence the deadweight loss or the loss in producer surplus will be $ 2.2 billion.