Homework Answers
After tax=$8
New quantity= 200
Price paid by consumers= $12
Price received by sellers= $4
a) Tax revenue= Tax* Quantity= 8*200= $1600
b) Deadweight loss= 1/2*(12-4)*(400-200)= $800
c) Loss to the consumers who left the market after tax= 0.5*(12-8)*(400-200)= $400
d) Loss to the producer who left the market after tax= 0.5*(8-4)*(400-200)= $400
e) Loss to the existing buyers after tax= (12-8)*200= $800
f) Loss to the existing selelrs after tax= (8-4)*200= $800
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