Microplastics have been discovered in clouds, where scientists say they could be contributing towards climate change. As such the government would like to reduce environmental pollution in South Africa. They have agreed to charge all producers of plastic bags a unit tax (that is the seller has a statutory burden). After the imposition of such a unit tax, supply curve (S) shifted from S. to S, as shown in the below figure. Which area represents the total tax paid by the consumer using below figure?

Microplastics have been discovered in clouds, where scientists say they could be contributing towards climate change. As such the government would like to reduce environmental pollution in South Africa. They have agreed to charge all producers of plastic bags a unit tax (that is the seller has a statutory burden). After the imposition of such a unit tax, supply curve (S) shifted from S. to S, as shown in the below figure. Which area represents the total tax paid by the consumer using below figure?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.10P

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The inverse demand function is p = 10q, where q is the number of units sold. The inverse supply function is defined by p = 2 + q. A tax of $2 is imposed on suppliers for each unit that they sell. After the tax is imposed, the equilibrium quantity with taxes is. 0 1 07 O 3 04 09
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The demand and supply equations for a product are: Qd= 300 — 6P and Qs= -40 + 6P. Determine the market equilibrium and draw graphs. Suppose that the government decides to impose a flat tax of 10% on each unit sold. Show that the price that consumers pay would be the same if the government imposed a tax of Rs. 1.70 per unit sold. Draw graphs and explain. Also calculate the total revenue earned by sellers before and after the tax, the tax revenue raised by the government, changes in consumer and producers surplus, and deadweight loss
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