b) (20 points) With the same demand and supply curves in part (a), assume that the government instead imposes a tax of $100 per unit on producers. With the tax in place, calculate the following: (i) consumer surplus (ii) producer surplus (iii) government tax revenue (iv) total surplus (v) deadweight loss.
Added by Hector G.
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Consumer surplus: Consumer surplus is the difference between what consumers are willing to pay for a product and what they actually pay. In this case, we can calculate consumer surplus by finding the area under the demand curve and above the price line. Show more…
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