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1. The graph shows demand and supply curves for beer, with market equilibrium price equal to $12.50 per case and market equilibrium quantity equal to 25 (million cases). A sales tax of $5 per million cases is imposed. P=125- 13 70 jo 30 b. Explain in words how you found the new quantity, and the prices. c. Calculate a dollar figure for the deadweight loss. d. Explain intuitively the source of the deadweight loss. a. Show the per unit tax on the graph, the new quantity transacted, the consumers' price and the producers' price, and the deadweight loss. Label with numbers. 10 e. Show on the graph the amount of the tax revenue collected by the government. f. Calculate a dollar figure for the tax revenue.

1. The graph shows demand and supply curves for beer, with market equilibrium price equal to $12.50 per case and market equilibrium quantity equal to 25 (million cases). A sales tax of $5 per million cases is imposed. P=125- 13 70 jo 30 b. Explain in words how you found the new quantity, and the prices. c. Calculate a dollar figure for the deadweight loss. d. Explain intuitively the source of the deadweight loss. a. Show the per unit tax on the graph, the new quantity transacted, the consumers' price and the producers' price, and the deadweight loss. Label with numbers. 10 e. Show on the graph the amount of the tax revenue collected by the government. f. Calculate a dollar figure for the tax revenue.

Principles of Microeconomics (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter8: Application: The Cost Of Taxation
Section8.1: The Oeadweight Loss Of Taxation
Problem 1QQ
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1. The graph shows demand and supply curves for beer, with market equilibrium price equal to $12.50 per case and market equilibrium quantity equal to 25 (million cases). A sales tax of $5 per million cases is imposed. P=1254 13 to 20 30 10 a. Show the per unit tax on the graph, the new quantity transacted, the consumers' price and the producers' price, and the deadweight loss. Label with numbers. b. Explain in words how you found the new quantity, and the prices. c. Calculate a dollar figure for the deadweight loss. d. Explain intuitively the source of the deadweight loss. e. Show on the graph the amount of the tax revenue collected by the government. f. Calculate a dollar figure for the tax revenue.
Transcribed Image Text:1. The graph shows demand and supply curves for beer, with market equilibrium price equal to $12.50 per case and market equilibrium quantity equal to 25 (million cases). A sales tax of $5 per million cases is imposed. P=1254 13 to 20 30 10 a. Show the per unit tax on the graph, the new quantity transacted, the consumers' price and the producers' price, and the deadweight loss. Label with numbers. b. Explain in words how you found the new quantity, and the prices. c. Calculate a dollar figure for the deadweight loss. d. Explain intuitively the source of the deadweight loss. e. Show on the graph the amount of the tax revenue collected by the government. f. Calculate a dollar figure for the tax revenue.
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