nonopolist sets a price above its marginal cost of production, reducing
quantity sold below that of a market.
c. The market price is too low for some firms to produce, so they do not produce the
good.
d. Some people don't like the good, so they choose not to purchase it.
7- Consider the market for laundry machines in the U.S.
$1500
1100
$1000
800
$500
5.5
7
20
Quantity of Laundry Machine
in millions
a) Calculate the before tax consumer's surplus and Seller's surplus. Show them on the
graph.
b) The U.S. government imposes $200/unit sale tax on seller, and tax increases price for
consumers by $100 and reduces quantity by 1.5 million. Shift the proper curve and
label the after-tax prices and quantity. calculate the tax revenue for government,
consumers' surplus, producer's surplus, and the deadweight loss. For full points show
your work.
1000+100= 1,100
1,000-200 = 800