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Transcribed Image Text:Question 18 When a tax is imposed, consumer surplus and producer surplus are reallocated to tax revenue. tax revenue and deadweight loss. deadweight loss. social welfare. government spending on public services. Expert Solution Students who’ve seen this question also like: Related Economics Q&AFind answers to questions asked by students like you. Q: If GDPMP of a country is 50 billion and product taxes are 2 billion while subsidies given are worth… A: The gross domestic product (GDP) is the money or market value of all the finished goods and services… Q: total amount of consumer surplus lost due to the tax 1. 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Ward, Mike Shor Publisher:Cengage Learning Managerial Economics & Business Strategy (Mcgraw-... ISBN:9781259290619 Author:Michael Baye, Jeff Prince Publisher:McGraw-Hill Education What happens to consumer and producer surplus after tax?A tax causes consumer surplus and producer surplus (profit) to fall.. Some of those losses are captured in the tax, but there is a loss captured by no party—the value of the units that would have been exchanged were there no tax. These lost gains from trade are known as a deadweight loss.
When a tax is imposed on some good what usually happens to consumer and producer surplus quizlet?When a tax is imposed on some good, the lost consumer surplus and producer surplus both typically end up as: tax revenue and deadweight loss. Assume that a $0.25/gallon tax on milk causes a loss of $250 million in consumer and producer surplus and creates a deadweight loss of $45 million.
What happens to producer surplus when consumers are taxed?Likewise, a tax on consumers will ultimately decrease quantity demanded and reduce producer surplus. This is because the economic tax incidence, or who actually pays in the new equilibrium for the incidence of the tax, is based on how the market responds to the price change – not on legal incidence.
When a tax is imposed on sellers consumer surplus and producer surplus both decrease?When a tax is imposed on sellers, consumer surplus and producer surplus both decrease. As the price elasticities of supply and demand increase, the deadweight loss from a tax increases. A tax on a good causes the size of the market to shrink.
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When a tax is imposed, consumer surplus and producer surplus are reallocated to
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