1. The graph shows demand and supply curves for beer, with market equilibrium price equal to $12.50 per case and market equilibrium quantity equal to 25 (million cases). A sales tax of $5 per million cases is imposed. P=125- 13 70 jo 30 b. Explain in words how you found the new quantity, and the prices. c. Calculate a dollar figure for the deadweight loss. d. Explain intuitively the source of the deadweight loss. a. Show the per unit tax on the graph, the new quantity transacted, the consumers' price and the producers' price, and the deadweight loss. Label with numbers. 10 e. Show on the graph the amount of the tax revenue collected by the government. f. Calculate a dollar figure for the tax revenue.
1. The graph shows demand and supply curves for beer, with market equilibrium price equal to $12.50 per case and market equilibrium quantity equal to 25 (million cases). A sales tax of $5 per million cases is imposed. P=125- 13 70 jo 30 b. Explain in words how you found the new quantity, and the prices. c. Calculate a dollar figure for the deadweight loss. d. Explain intuitively the source of the deadweight loss. a. Show the per unit tax on the graph, the new quantity transacted, the consumers' price and the producers' price, and the deadweight loss. Label with numbers. 10 e. Show on the graph the amount of the tax revenue collected by the government. f. Calculate a dollar figure for the tax revenue.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter8: Application: The Cost Of Taxation
Section8.1: The Deadweight Loss Of Taxation
Problem 1QQ
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