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Suppose the current equilibrium price of cheese pizzas is $9.00, and 10 million pizzas are sold per month. After the federal government imposes a $4.00

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Suppose the current equilibrium price of cheese pizzas is $9.00, and 10 million pizzas are sold per month. After the federal government imposes a $4.00 per pizza tax, the equilibrium price of pizzas rises 24.00- to $11.00, and the equilibrium quantity falls to 6 million. This situation is illustrated in the graph. 22.00- Compare the economic surplus in this market when there is no tax to when there is a tax on pizza. 1.) Use the triangle drawing tool to shade in the change in economic surplus as a result of the tax. Properly label this shaded area indicating whether surplus has increased (new economic surplus) or decreased (deadweight loss). Price (dollars per pizza) 2.) Use the rectangle drawing tool to shade in new government revenue as a result of the tax. Properly label this shaded area. Carefully follow the instructions above, and only draw the required objects. . .. 2.00- 0.00- - 10 10 12 14 16 18 20 Quantity (millions of pizzas per month)

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