HO_04_201_Sp03 - b What area(s represent Consumer Surplus...

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Cal Poly Pomona, EC 201 Principles of Microeconomics – Professor Brown Handout # 4 1) Show the effect of a $1.50 per banana price ceiling on the graph above. Be sure to indicate any surplus or shortage. If there was a $1.50 per banana price floor would it be binding? Would there be any shortage or surplus? The above diagram shows the effect of a tax in the market for mangos 2) a) If this were an excise tax, which curve would shift? ______ In what direction? ______ Realize the area represented by the two rectangles B and D represents the tax revenue to government
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Unformatted text preview: b) What area(s) represent Consumer Surplus after the tax? _________ c) What area(s) represent Producer Surplus after the tax? _________ d) What area(s) represent the Deadweight Loss of the tax? _________ Quantity of Mangos Price per Mango Demand P - no tax P – sellers (w/ tax) P – buyers (w/ tax) A Q no tax B C F D E Q tax Supply Quantity of Bananas Price per Banana Demand $2.00 Q* Supply...
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