Search Jump to... Sapling Learning Map Below is a graph of the market for socks.

Question

Search Jump to... Sapling Learning Map Below is a graph of the market for socks. Use the graph to find tax revenue and the deadweight loss at different tax levels. The orange line at the top is to help you answer the questions, but the graph itself will not be graded. You will need to scroll down to see all the questions. When a tax of $1.00/pair is imposed Number on the market for socks, equilibrium quantity will fall to 10 pairs Prevailing price Number the tax (the full cost Supply onsumers wilble The deadweight loNumber and the governmentNumber will generate tax revenue o Demand 0 2 4 68 10 12 14 16 18 20 Quantity (pairs of socks) If a tax of $3 0/nair is Previous Give Up &ViewSckton; Check Answer e Next Ext Hint Qu4 0 -" F6 F5 7 0

Explanation / Answer

When a tax of $1 is imposed on the market for socks, equilibrium quantity will fall to 12 pairs.

Prevailing price including the tax will be $4.

The Deadweight loss = 0.5[($4- $3) * (14 - 12) = $1

Tax Revenue = $1 * 12 = $12

When a tax of $3 is imposed on the market for socks, equilibrium quantity will fall to 8 pairs.

Prevailing price including the tax will be $5.

The Deadweight loss = 0.5[($5- $2) * (14 - 8) = $9

Tax Revenue = $3 * 8 = $24

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