the following graph represents the demand and supply for an imaginary good calle

Question

the following graph represents the demand and supply for an imaginary good called Pinckney the following graph represents the demand and supply for an imaginary good called Pinckney the following graph represents the demand and supply for an imaginary good called Pinckney Attempts: Average: 12 1. Understanding the implications of taxes on welfare The folowing graph represents the demand and supply for an imaginary good called a pinckney. The black point (plus symbol) indicates the pre-tax Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario. Demand Supply 375 QUANTITY (Pinckneys

Explanation / Answer

Per unit tax = Price buyers Pay - Sellers receive => 37.50 - 22.50 = 15

Equilibrium quantity before tax is where demand equals supply = 4

Price before tax is where demand equal supply = 30

CS after tax = A

Tax Revenue = B + D

PS before tax = D + E + F

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