2:34 Done Attachment HW pts. 3@ Beer sold in glass bottles has been a problem fo

Question

2:34 Done Attachment HW pts. 3@ Beer sold in glass bottles has been a problem for a while. Many are found littering the side of roads and in public injury. The County Commission levies a special tax on cases of bottled beer to menace. (hint: D1 does not mean D1 1)The 1st equilibrium is found at sales of gatS 2)Initially, consumer surplus is represented by a triangle containing q,S ·S for its 3)Initially, producer surplus is represented by triangle by producer surplus combined, which is 5)After the new tax per case is levied, the demand curve shifts from D2 to DI. The demand curve retreating leaves behind an area that was formerly left of the supply and demand curves, a quadrilateral bound by qby qbyS by S 6)The new equilibrium is represented by sales of qat price of S and cost of S each 7)The new consumer surplus is represented by a triangle 8)The new producer surplus is represented by triangle by 9)Society's benefit is represented by consumer and producer combined equaling the area of a triangle bound by q by $ 10)Tax per unit is Stotal tax revenues areS )The deadweight loss is approximated by triangle q by 444468 8888 8 12 12 12 12 12 12 12 12 12 12 12 16 16 1616 1616181822 22 22 22 48 (you will have two spare unused answers!)

Explanation / Answer

1. The first equilibrium is found at the sales level at 12 units and price level of $16.

2. The initial consumer surplus is represented by triangle containing 12 units, $22 and $16 being the corners of the price axis.Thus, price of 22 - 16 = $6.

3. The initial producer surp;us is represented by triangle containing 12 units , $16 and $4 being the corners of the price axis and thus price = 16 - 4 = $12.

4. Societal surplus is sum of consumer and producer surplus which is 12 units and price of $22 and $4, thus price = 22- 4 = $18.

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