Question

.1 T-Mobile LTE 14:31 @ 1 15%O Done Photo Photo as the w ord warplus 9 What is the sa m e producer wuples were in this beforth 10. For any type of tax the government imposes supply plus demand equals market price b tax revenue plus deadweight loss equal total lost social welfare. tax revenue plus market price equals deducight loss d. deadweight loss plus economic distortion qualsias Tevere. e total lost social welfare plus tax revenue quals deadweight loss, 11. Assume that a $0.10 pound tax on apples raises S100 million in revenue but causes a $125 millions of consumer and producer surplus. From this information, we know that the deadweight loss from the tax is. a S225 milion b $100 million c. $125 million d. $25 million e S1.25 million 12 A(n) in the clasticity of supply or demand in a market for a good that is taxed would tend to deadweight loss from that tas a docrcase, increase b increase: decrease

Answer 1

8. Producer surplus is the area below the equilibrium price line and above the supply curve. Initially producer surplus is C+G+E.After imposition of tax,C portion is aid as taxes and G is the dead weight loss. Hence,Producer surplus lost due to tax is area C+G.Option d. is correct.

9.Producer surplus is the area below the equilibrium price line and above the supply curve. Initially producer surplus is C+G+E. Consumer surplus is the area below the demand curve and above the equilibrium price line.The consumer surplus is A+B+F. Therefore total surplus before tax is A+B+F+C+G.Option a. is correct.

10.Tax revenue plus DWL equals total lost social welfare.Option b. is correct.

11.$125 million loss of consumer and producer surplus includes,revenue to government and dead weight loss.Revenue to government is $100 million. Therefore, DWL is $25 million.Option d is correct.