The government is considering levying a tax of $120 per unit on suppliers of either leather jackets or smartphones. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for leather jackets is shown by DL (on the first graph), and the demand for smartphones is shown by Ds (on the second graph). Suppose the government taxes leather jackets. The following graph shows the annual supply and demand for this good. It also shows the supply curve (S+ Taz) shifted up by the amount of the proposed tax ($120 per jacket). On the following graph, use the green rectangle (triangle symbols) zo shade the area that represents tax revenue for leather jackets. Then use the black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax. College Success Tips Leather Jackets Market 240 220 Supply S+Tax 200 Tax Revenue 180 + 160 Deadweight Loss 140 + 120 100 80 60 40 20 100 150 200 250 300 30 400 450 500 s00 600 QUANTITY (Jackets) 50 PRICE(Dollars per jacket)

The government is considering levying a tax of $120 per unit on suppliers of either leather jackets or smartphones. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for leather jackets is shown by DL (on the first graph), and the demand for smartphones is shown by Ds (on the second graph). Suppose the government taxes leather jackets. The following graph shows the annual supply and demand for this good. It also shows the supply curve (S+ Taz) shifted up by the amount of the proposed tax ($120 per jacket). On the following graph, use the green rectangle (triangle symbols) zo shade the area that represents tax revenue for leather jackets. Then use the black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax. College Success Tips Leather Jackets Market 240 220 Supply S+Tax 200 Tax Revenue 180 + 160 Deadweight Loss 140 + 120 100 80 60 40 20 100 150 200 250 300 30 400 450 500 s00 600 QUANTITY (Jackets) 50 PRICE(Dollars per jacket)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The government is considering levying a tax of $120 per unit on suppliers of either leather jackets or smartphones. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for leather jackets is shown by DLDL (on the first graph), and the demand for smartphones is shown by DSDS (on the second graph). Suppose the government taxes leather jackets. The following graph shows the annual supply and demand for this good. It also shows the supply curve (S+TaxS+Tax) shifted up by the amount of the proposed tax ($120 per jacket). On the following graph, use the green rectangle (triangle symbols) to shade the area that represents tax revenue for leather jackets. Then use the black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax. Instead, suppose the government taxes smartphones. The following graph shows the annual supply and demand for this good, as well as the supply curve…
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