Tax revenue
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Use the graph below that shows the effect of a $4 per-unit
tax on suppliers to answer the following questions:
a. What are equilibrium price and quantity before the
tax? After the tax?
b. What is producer surplus when the market is in
equilibrium before the tax? After the tax?
c. What is consumer surplus when the market is in
equilibrium before the tax? After the tax?
d. What is total tax revenue collected after the tax is
implemented.
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Solution Summary
Tax revenue is computed.
Solution Preview
a) Before tax, equilibrium price = $6 and quanitity = 200 units
After tax, equilibrium price = $8 and ...
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