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# csps2a - _1,000 gallons d What is the consumer surplus...

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20 50 Additional Problem #2 Answers : Consumer and Producer Surplus The graph below shows the market for anti-freeze. The government imposes a sales tax on sellers of T. \$/gallon 60 S + T S 40 30 10 D Quantity 0 1 2 3 4 5 6 (thousands of gallons) a) What is the equilibrium price/gallon without the tax? ___\$30 _______; the equilibrium quantity without the tax? __3,000 gallons ____. b) What is the tax per gallon? ___\$20 ________. How much revenue will the sales tax raise? __\$40,000 _____. c) The tax decreases consumption by?
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Unformatted text preview: __1,000 gallons __. d) What is the consumer surplus before the tax? ___\$45,000 ___; after the tax? ___\$20,000 ____. What is the producer surplus before the tax? __\$45,000 __; after the tax? __\$20,000 __. What is the dead weight loss associated with the tax? _____\$10,000 _____. Note : This problem may also be constructed with algebraic expressions for demand and supply as follows: Demand : P = 60 – 10Q Supply : P = 10Q Supply + Tax: P = 20 + 10...
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