csps2a - __1,000 gallons __. d) What is the consumer...

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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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This note was uploaded on 10/26/2009 for the course ECON 180-004-20 taught by Professor Bresnock during the Fall '09 term at UCLA.

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