Question
Ceteris Paribus, suppose the Ohio government places a specific sales tax for calamari. If the current market equilibrium for the market of calamari is a
Ceteris Paribus, suppose the Ohio government places a specific sales tax for calamari. If the current market equilibrium for the market of calamari is a quantity of 1,000 with an average price of $5, and the state of Ohio implements a 10% sales tax where quantity of goods sold reduces to 900, what would the tax revenue, deadweight loss, total producer surplus (before & after tax), and total consumer surplus (before & after tax) be? Assume the most the buyer is willing to pay is $8, while the seller is willing to sell as low as $2.
A. Total Consumer Surplus Before Tax (1 point):
B. Total Producer Surplus After Tax (1 point):
C. Tax Revenue After Tax (1 point):
D. Total Consumer Surplus After Tax (1 point):
E. Total Producer Surplus After Tax (1 point):
F. Deadweight Loss After Tax (1 point):
Answer all the questions with typed calculation.
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