Government-imposed taxes cause reductions in the activity that is being taxed, which has important implications for revenue collections. To understand the effect of such a tax, consider the monthly market for wine, which is shown on the following graph. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Suppose the government imposes a $10-per-case tax on suppliers. At this tax amount, the equilibrium quantity of wine is cases, and the government collects in tax revenue. Now caiculate the government's tax revenue ir it sets a tax or $0,$10,$20,$25, $30,$40, or $50 per case. (Hint: To find the equilibrium quantity after the tax, adjust the "Quantity" field until the Tax equals the value of the per-unit tax.) Using the data you generate, piot a Laffer curve by using the green points (triangle symbol) to plot total tax revenue at each or those tax levels. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Suppose the government is currently imposing a $15-per-case tax on wine. True or False: The government can raise its tax revenue by increasing the per-unit tax on wine. True False Consider the deadweight loss generated in each of the following cases: no tax, a tax of $20 per case, and a tax of $40 per case. On the following graph, use the black curve (plus symbols) to illustrate the deadweight loss in these cases. (Hint: Remember that the area of a triangle is equal to 21 Base x Height. In the case of a deadweight loss triangle found on the graph input tool, the base is the amount of the tax and the height is the reduction in quantity caused by the tax.) As the tax per case increases, deadweight loss Government-imposed taxes cause reductions in the activity that is being taxed, which has important implications for revenue collections. To understand the effect of such a tax, consider the monthly market for wine, which is shown on the following graph. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Suppose the government imposes a $10-per-case tax on suppliers. At this tax amount, the equilibrium quantity of wine is cases, and the government collects in tax revenue. Now caiculate the government's tax revenue ir it sets a tax or $0,$10,$20,$25, $30,$40, or $50 per case. (Hint: To find the equilibrium quantity after the tax, adjust the "Quantity" field until the Tax equals the value of the per-unit tax.) Using the data you generate, piot a Laffer curve by using the green points (triangle symbol) to plot total tax revenue at each or those tax levels. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Suppose the government is currently imposing a $15-per-case tax on wine. True or False: The government can raise its tax revenue by increasing the per-unit tax on wine. True False Consider the deadweight loss generated in each of the following cases: no tax, a tax of $20 per case, and a tax of $40 per case. On the following graph, use the black curve (plus symbols) to illustrate the deadweight loss in these cases. (Hint: Remember that the area of a triangle is equal to 21 Base x Height. In the case of a deadweight loss triangle found on the graph input tool, the base is the amount of the tax and the height is the reduction in quantity caused by the tax.) As the tax per case increases, deadweight loss
