Suppose that the government collects a specific tax of t = $0.11 per rose stem f

Question

Suppose that the government collects a specific tax of t = $0.11 per rose stem from rose farmers. Before the tax, the demand curve and the supply curve determine the competitive equilibrium at price $0.30 per stem and producers sell 1.25 billion rose stems per year. Considering that the price for the buyers after the tax is $0.32, you'll be able to find the sellers price and using graphical analysis describe the welfare effects of the next tax on rose stems, in your graph write the changes in consumer and producer surplus and what is the income received by the government considering that farmers only sell 1.16 billion rose stems after the tax. With this quantities and prices, you should show also compute the amound (in dollars) of deadweight loss. And the change in it before and after the tax is imposed.

Explanation / Answer

http://finance.yahoo.com/marketupdate/inplay

http://www.treasury.gov/connect/blog/Documents/20121212_Economics of Higher Ed_vFINAL.pdf

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