00:01
This is a rough representation of figure four from earlier in the chapter.
00:07
And a, b, c, d, e, and f, and g, all those sections are identical to the way they appear there.
00:14
So let's examine, instead of a tariff, what happens if we put in place a tax? well, just like with a tariff, the tax is going to lower the quantity exchanged from q1 to q2.
00:28
But what happens to consumer surplus, producer surplus, tax revenue, and deadweight loss? so sections a and b will make up the consumer surplus.
00:40
The producer surplus will only be section g.
00:44
Now what about the four sections in the middle? well, c, d, and e are now all part of tax revenue.
00:54
And the only deadweight loss that's left will be f...