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Please explain more about the concept of Exercise Tax. Make this concept more clear. Policy: Excise Tax . An excise tax (or a specific tax)

Please explain more about the concept of Exercise Tax.

Make this concept more clear.

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Policy: Excise Tax . An excise tax (or a specific tax) is an amount paid by either the $20 Area Size (dollars/year) consumer or the producer per $16 million S+ $6 8 million C 8 million unit of the good at the point of 4 million A 2 million G 8 million sale (i.e., price increase) p = $12 . . . . H S 8 million B Price (dollars per unit) C E $8 .. . .. .. -. . . The amount paid by the G PS = $6 demanders exceeds the total H $2 amount received by the sellers D 4 6 10 by amount T Quantity (millions of units per year)Impact of a $6 Excise Tax $20 Area Size (dollars/year) $16 million S + $6 8 million C 8 million With No Tax With Tax Impact of Tax E 4 million A 2 million Consumer surplus A+B +C+E A ($16 million) -B- C-E G 8 million ($36 million) (-$20 million) p = $12 H S 8 million Producer surplus F + G+ H ($18 million) H ($8 million) -F - G (-$10 million) Price (dollars per unit) B C B + C+ G ($24 million) E Government receipts from tax zero B + C+ G ($24 million) $8 . . . . . . . .. Net benefits (consumer surplus + A+B+C+E+ A+ B +C+G+H -E-F G F producer surplus + government F + G+H ($48 million) (-$6 million) Ps = $6 receipts) ($54 million) H Deadweight loss zero E + F ($6 million) E + F ($6 million) $2 4 6 10 Quantity (millions of units per year)

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