Question

The following graph represents the demand and supply for blinkies (an imaginary product). The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario. PRICE (Dollars per blinkie) QUANTITY (Blinkies) Demand Supply A B C D E F 10.00 24 6.00 14.00 12 Complete the following table, given the information presented on the graph. Result Value Per-unit tax Price consumers pay before tax Equilibrium quantity before tax In the following table, indicate which areas on the previous graph correspond to each concept. Check all that apply. Concept A B C D E F Consumer surplus after the tax is imposed Producer surplus after the tax is imposed Deadweight loss after the tax is imposed

Answer 1

The graph representing the demand and supply in the market is critical for visualizing changes due to taxes. The per-unit tax causes a disparity between prices paid by consumers and those received by producers, impacting consumer surplus, producer surplus, and creating a deadweight loss.

Step-by-step explanation:

When analyzing the effect of taxation on a market, the graph that represents demand and supply is crucial for visualizing the changes. We can infer that the per-unit tax imposed creates a difference between the price consumers pay and what producers receive. Before tax, the equilibrium price and quantity are where the demand and supply curves intersect, shown as the black point (plus symbol) on the graph.

After a tax is introduced, consumers pay a higher price, but producers receive less because part of the consumer price goes to the government as tax. This is indicated by the grey points (star symbol) on the graph. The areas under the demand curve and above the price paid by consumers represent the consumer surplus after the tax. Whereas the areas under the price received by producers and above the supply curve represent the producer surplus after the tax. The deadweight loss after the tax is represented by the triangle area between the original and the post-tax supply curve and the demand curve.

For the specific values and areas, we need the numerical data from the graph to accurately complete the table and determine the areas for consumer surplus, producer surplus, and deadweight loss.