Question

Consumer surplus (after-tax) E. Producer surplus (after-tax): h. Total surplus: i. Amount of tax paid by buyer (tax incidence quantity sold): . Amount of tax paid by seller (tax incidence quantity sold): k. Total deadweight loss: Figure 2a. Figure 2b. Price t Prise pply Supply Denand 03 1 132 23 3 33 4435 051 13 33 3 354455 Dwant

Answer 1

Answer
f)
the tax amount is the vertical distance between A and B
tax =9-4=$5

after tax, the supply curve shift to the left and the consumer pays the price of $9 and consume one unit

consumer surplus =0.5*(Y-axis intercept of the demand curve -P)*Q
=0.5*(12-9)*1
=1.5
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g)
After tax producer receives price =consumer pay -tax
=9-5=$4
PS=0.5*( P- Y-axis intercept of the supply curve )*Q
=0.5*(4-2)*1
=1

h)
total surplus =producer surplus +consumer surplus +tax revenue
tax revenue =tax rate *Q=5*1
=5
TS=1.5+1+5=7.5
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i)
tax incidence on consumer =after tax price consumer pay - before tax price
before tax equilibrium is at Qd=Qs
where
P=6 and Q=2 units
tax incidence of consumer =9-6=3

amount of tax paid by consumer =3*1=$3
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j)
tax incidence of producer =P- after-tax price producer receives
=6-4=2
Tax amount paid by producer =2*1=$2
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k)
deadweight loss =0.5*change in quantity *tax rate
=0.5*(2-1)*5
=2.5
the DWL is $2.5