This assignment is to Observe Consumer Surplus, Producer Surplus, Government Sur
ID: 1092723 • Letter: T
Question
This assignment is to Observe Consumer Surplus, Producer Surplus, Government Surplus, Total Surplus, and the Deadweight Loss under each of the following policies: The table provided to review is for the observation.
a. No taxation by the government.
b. Government imposes a $2 tax on the buyers (similar to sales tax, but the tax amount is fixed).
c. Government imposes a $2 tax on the sellers (you can think of it as an access to the market charge, similar to a tariff, but the tax amount is fixed.
Questions to be answered:
No Tax
Price
Tax
Effective Price
Demand
Supply
Quantity
Demand
Supply
Consumer Surplus
49.00
0.1
0
0.1
21.8
2.3
2.1
9.95
0.033333
Producer Surplus
32.67
4
0
4
14
14
14
4
4
Government Surplus
0.00
11
0
11
0
35
21.9
0.05
6.633333
Total Surplus
81.67
With tax on Buyers
Price
Tax
Effective Price
New Demand
Supply
Quantity
New Demand
Supply
Consumer Surplus
33.64
0.1
2
2.1
17.8
2.3
2.1
7.95
0.033333
Producer Surplus
22.43
3.2
2
5.2
11.6
11.6
11.6
3.2
3.2
Government Surplus
23.20
8
2
10
2
26
18
0
5.333333
Total Surplus
79.27
Deadweight Loss
2.40
With tax on Sellers
Price
Tax
Effective Price
Demand
New Supply
Quantity
Demand
New Supply
Consumer Surplus
33.64
1.1
2
-0.9
19.8
-0.7
5.1
8.45
3.033333
Producer Surplus
22.43
5.2
2
3.2
11.6
11.6
11.6
5.2
5.2
Government Surplus
23.20
10
2
8
2
26
20
1
8
Total Surplus
79.27
Deadweight Loss
2.40
No Tax
Price
Tax
Effective Price
Demand
Supply
Quantity
Demand
Supply
Consumer Surplus
49.00
0.1
0
0.1
21.8
2.3
2.1
9.95
0.033333
Producer Surplus
32.67
4
0
4
14
14
14
4
4
Government Surplus
0.00
11
0
11
0
35
21.9
0.05
6.633333
Total Surplus
81.67
With tax on Buyers
Price
Tax
Effective Price
New Demand
Supply
Quantity
New Demand
Supply
Consumer Surplus
33.64
0.1
2
2.1
17.8
2.3
2.1
7.95
0.033333
Producer Surplus
22.43
3.2
2
5.2
11.6
11.6
11.6
3.2
3.2
Government Surplus
23.20
8
2
10
2
26
18
0
5.333333
Total Surplus
79.27
Deadweight Loss
2.40
With tax on Sellers
Price
Tax
Effective Price
Demand
New Supply
Quantity
Demand
New Supply
Consumer Surplus
33.64
1.1
2
-0.9
19.8
-0.7
5.1
8.45
3.033333
Producer Surplus
22.43
5.2
2
3.2
11.6
11.6
11.6
5.2
5.2
Government Surplus
23.20
10
2
8
2
26
20
1
8
Total Surplus
79.27
Deadweight Loss
2.40
Explanation / Answer
1. No it does not matter because the quantities are the same.
2. Under the no taxation.
3. The government benefits and the producers and consumers lose.
4. No tax would be the best because it maximizes total surplus.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.