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The figure shows the market for rides before and after the imposition of a $2.75 per-ride tax. How can we use the figure to measure
The figure shows the market for rides before and after the imposition of a $2.75 per-ride tax.
How can we use the figure to measure the effect the tax has on consumers and on Uber and Lyft?
Redraw the graph and show the areas representing the losses to consumers and to firms resulting from the implementation of the tax.
Price 32 \"'""" per ride) Deadwelght loss $2.75 tax shilts Pn'ce consumers the supply curve pay an\" the 32'75' $21 75 ............................................... "p by $235 per-ride tax is ' I imposed i 81 . i i E 20.00 ................................................. ! .................................. i Price received by g ride-hailing 19.00 ............................................... companies after E paying the tax , L : : 0 425.000 500.000 Quantity (rides per day) The market for ride-hailing services before and after the imposition of a $2.75-per-ride tax shows that the tax shifts the supply curve up by $2.75, increasing the price paid by the consumer from $20 to $21.75 and decreasing the price received by ridehailing companies from $20 to $19. The quantity of rides provided also falls from 500,000 to 425,000Step by Step Solution
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