After Tax Demand 200 180 160 140 Tax Revenue Consumer Surplus 120 t Tax Wedge 10

Question

After Tax Demand 200 180 160 140 Tax Revenue Consumer Surplus 120 t Tax Wedge 100 80 a 80 40 20 Supply Producer Surplus Deadweight Loss 0,0 20 30 40 50 60 7080”100 QUANTITY (Fans) Complete the following table by using the previous graphs to determine surplus, producer surplus, tax revenue, and deadweight loss after the tax Note: You can determine the areas of different portions of the graph by selecting the relevant area After Tax Before Tax (Dollars) (Dollars) Consumer Surplus Producer Surplus Tax Revenue Deadweight Loss

Explanation / Answer

Consumer surplus

Before tax= 1/2*40*80 = 1600

After tax = 1600 - (1/2*10*20) = 1600- 100= 1500

Producers surplus

Before tax = 1/2*40*80= 1600

After tax = 1500

Tax revenue

1/2*40*10= 200

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