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Consider the following supply and demand schedule for candy bars: Price ($) Supply (millions of candy bars) Demand (millions of candy bars) 0.25 2 14
Consider the following supply and demand schedule for candy bars:
Price ($) | Supply (millions of candy bars) | Demand (millions of candy bars) |
---|---|---|
0.25 | 2 | 14 |
0.50 | 6 | 12 |
0.75 | 10 | 10 |
1.00 | 14 | 8 |
1.25 | 18 | 6 |
1.50 | 22 | 4 |
1.75 | 26 | 2 |
A. Sketch the market supply and demand curves. Show the equilibrium quantity and price.
B. Graphically show the producer surplus and consumer surplus in the market for candy bars.
C. What would happen to the price of this product if a tax of $0.75 per candy bar sold were enacted by the government? Show your answer graphically.
D. Show the deadweight loss due to the tax on your diagram.
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