00:02
So we need to determine the following.
00:07
Equilibrium price before the tax.
00:23
So before the tax, the price where supply and demand curves cross is equal to $10.
00:31
We want consumer surplus before the tax.
00:47
So based off of our supply and demand curves, our consumer surplus is represented by the area of this triangle.
01:00
So therefore, we can see the height is 22 minus 10, and the base is equal to 600.
01:38
So we see that it is 3 ,600.
01:42
The producer surplus before the tax is going to be the area of this triangle.
02:00
So the height of this triangle is 10 minus 2.
02:08
The base is 600.
02:10
So it's 2 ,400.
02:41
What is the total surplus before the tax? so we're just going to add consumer and producer surplus.
03:03
So that gives you 6 ,000.
03:14
Then we want the consumer surplus after the tax.
03:18
So the supply curve is going to shift to the left after the tax.
03:29
And the new equilibrium is going to be at point a.
03:33
So supply curve will shift so that now we're at point a for equilibrium.
03:43
So then our equilibrium price is 16, and then the quantity is 300.
03:54
So to find the consumer surplus, we're going to find the area of the triangle representing the consumer surplus.
04:28
So you can see that now this triangle is here.
04:33
So it's going to be 22 minus 16 for the height, and the base is 300.
04:56
So we get that the new consumer surplus is 900...
