mework (Ch 08) 3. Relationship between tax revenues, deadweight loss, and demandelasticity The government is considering levying a tax of $60 per unit on suppliers of other concert tickets or bus passes. The supply curve for each of these mwa good n identical, as you can see on each of the following grophs. The demand for concert tickets is shown by De (on the fjest graph), and the semand for bus pastes is shown by D. (on the second graph). Suppose the povemment taves concert tickets. The following graph shows the annual supply and demand for this good. It also shows the supply curve S + The) chifted up by the amount of the proposed tax (560 per ticket), On the following use the green rectangle (triangle symbols) to shade the area that represents tax revenue for concert tickets. Then use the lack triazole plus symbols) to shade the area that represents the deadweight loss associated with the tax. Concert Tickets Market 10 Supply S. 10 Tax Revenue Deadweight Loss 39 Od Homework (Ch 08) V. 100 150 200 25000 15000 15000 5500 QUANTITY (Tick) Instead, suppose the government taxes bus passes. The following graph shows the annual supply and demand for this good, as well as the supply curve shifted up by the amount of the proposed tax ($60 per pass). On the followme proh, do for bus passes the same thing you did previously on the granh for concert tickets. Use the green rectangle (triangle symbols) to shade the area that represents tax revenue for bus passes. Then, use the black trangle (plus symbols) to shade the area that represents the death o associated with the tax. Bus Passes Market Supply 5 Tas 100 The Reven Deadweight Loss PRICE ( Dars per a Search Homework (Ch 08) X PRICE 40 20 0 0000000000 QUANTITY Complete the following table with the tax revenue collected and deadweight loss caused by each of the tax proposals, Tax Revenue (Dollars) Deadweight loss (Dollars) If the Government Taxes... Concert tickets at $60 per ticket Bus passes at $60 per pass Suppose the government wants to tax the good that will generate more tax revenue at a lower welfare cost. In this case, it should tax because all else held constant, taxing a good with a relatively elastic demand generates larger tax revenue and smaller deadweight loss Grade It Now Save & Continue Continue without saving