Consider the market for air conditioning units. The following graph shows the demand and supply
for air conditioning units before the government imposes any taxes. First, use the black point (plus
symbol) to indicate the equilibrium price and quantity of air conditioning units in the absence of a
tax. Then use the green point (triangle symbol) to shade the area representing total consumer
surplus (CS) at the equilibrium price. Next, use the purple point (diamond symbol) to shade the
area representing total producer surplus (PS) at the equilibrium price. Suppose the government
imposes an excise tax on air conditioning units. The black line on the following graph shows the
tax wedge created by a tax of $80 per air conditioner.First, use the tan quadrilateral (dash
symbols) to shade the area representing tax revenue. Next, use the green point (triangle symbol)
to shade the area representing total consumer surplus after the tax. Then, use the purple point
(diamond symbol) to shade the area representing total producer surplus after the tax. Finally, use
the black point (plus symbol) to shade the area representing deadweight loss. Complete the
following table by using the previous graphs to determine the values of consumer and producer
surplus before the tax, and consumer surplus, producer surplus, tax revenue, and deadweight loss
after the tax. Note: You can determine the areas of different portions of the graph by selecting the
relevant area..
Consider the market for air conditioning units The followin.pdf
1. Consider the market for air conditioning units. The following graph shows the demand and supply
for air conditioning units before the government imposes any taxes. First, use the black point (plus
symbol) to indicate the equilibrium price and quantity of air conditioning units in the absence of a
tax. Then use the green point (triangle symbol) to shade the area representing total consumer
surplus (CS) at the equilibrium price. Next, use the purple point (diamond symbol) to shade the
area representing total producer surplus (PS) at the equilibrium price. Suppose the government
imposes an excise tax on air conditioning units. The black line on the following graph shows the
tax wedge created by a tax of $80 per air conditioner.First, use the tan quadrilateral (dash
symbols) to shade the area representing tax revenue. Next, use the green point (triangle symbol)
to shade the area representing total consumer surplus after the tax. Then, use the purple point
(diamond symbol) to shade the area representing total producer surplus after the tax. Finally, use
the black point (plus symbol) to shade the area representing deadweight loss. Complete the
following table by using the previous graphs to determine the values of consumer and producer
surplus before the tax, and consumer surplus, producer surplus, tax revenue, and deadweight loss
after the tax. Note: You can determine the areas of different portions of the graph by selecting the
relevant area.
