Wednesday
September 17, 2014

Homework Help: Economics

Posted by G on Thursday, April 10, 2008 at 4:25am.

I am trying to calculate the reduction in consumer surplus and producer surplus
caused by the tax in this graph.

The price with the tax is $12. The buyers pay $16. Sellers receive $8. The quantity has decreased from 25 to 15.

The answers provided for the reduction of consumer and producer surplus are $100,$80,$70, $60 for each.

I am getting $60 for each reduction in consumer and producer surplus and it does not seem right to me.
Price $
22_________________
20_________________
18_________________
16_________________
_________{___|_____|
12_______{TAX|_____|
_________{___|_____|
8____________|_____|
6____________|_____|
4____________|_____|
2____________|_____|
______5__10__15_20_25_30_Quantity

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