Homework Answers
(a) From the graph we can see that the tex wedge is $300 per unit at the quantity = 5000 HDTV . Therefore,the equilibrium quantity after tax= 5000 HDTVs and equilibrium price = $1500.
(b) Consumer surplus under tax = (0.5)(2000-1500)(5000)= $1250000
Producer surplus under tax = (0.5)(1200-200)(5000)= $3250000.
Total surplus under tax = CS+ PS = $(1250000+3250000)= $4500000
(c) Deadweight loss = (0.5)(1500-1200)(6000-5000)= $150000
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