Homework Answers
The after-tax quantity is given to be 
. For the given values of taxes, we have the table as below.
| T | Q 
|
TR  |
| 0 | 160 | 0 |
| 30 | 140 | 4200 |
| 90 | 100 | 9000 |
| 120 | 80 | 9600 |
| 150 | 60 | 9000 |
| 210 | 20 | 4200 |
| 240 | 0 | 0 |
The graph would be as below.
According to the graph, the base of the DWL triangle is T, and the height is 2T/3.
The reason being that, the base of the triangle is the
difference between the price charged to customers and the price
received by the producers, which is T. Also, the height of the
triangle would be 
.
The DWL would be 
. The table would be as below.
| T | DWL |
| 0 | 0 |
| 60 | 1200 |
| 120 | 4800 |
| 180 | 10800 |
| 240 | 19200 |
The graph would be as below.
The correct options would be
- The government could decrease the dead-weight loss by reducing the tax.
- The government could increase tax revenue by reducing the tax to $120.
As can be seen in the second graph, the DWL increases as T increases, and reducing the tax T would reduce the DWL. Also, in the first graph, the curve is maximum at T=$120, and reducing tax to that would definitely increase tax-revenue in compare to T=$140. After $120, for each next tax, the tax revenue decreases. Hence, tax revenue at T=$140 would be definitely more than tax revenue at T=$240.
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Consider the market for mountain bikes. The following graphshows the demand and supply for mountain...
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shows the demand and supply for mountain bikes before the
government imposes any taxes. First, use the black point (plus
symbol) to indicate the equilibrium price and quantity of mountain
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at the equilibrium price. Next, use the purple point (diamond
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representing total producer surplus...
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shows the demand and supply for mountain bikes before the
government imposes any taxes. First, use the black point (plus
symbol) to indicate the equilibrium price and quantity of mountain
bikes in the absence of a tax. Then use the green point (triangle
symbol) to shade the area representing total consumer surplus (CS)
at the equilibrium price. Next, use the purple point (diamond
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Consider the market for designer purses. The following graph
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government imposes any taxes.First, use the black point (plus symbol) to indicate the
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representing total consumer surplus (CS) at the equilibrium price.
Next, use the purple point (diamond symbol) to shade the area
representing total producer surplus...
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