The government is considering levying a tax of $25 per unit on suppliers of either windbreakers or bucket hats. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for windbreakers is shown by DW??(on the first graph), and the demand for bucket hats is shown by DB??(on the second graph).

The government is considering levying a tax of $25 per unit on suppliers of either windbreakers or bucket hats. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for windbreakers is shown by Dw (on the rst graph), and the demand for bucket hats is shown by D3 [on the second graph]. Suppose the government taxes Windbreakers. The following graph shows the annual supply and demand for this good. It also shows the supply curve {3+Itu'] shifted up by the amount of the proposed tax ($25 per windbreaker]. On the foiiowing graph, use the green rectangle {triangie symbois) to shade the area that represents tax revenue for Windbreakers. Then use the biack triangie (pies symbois} to shade the area that represents the deadweight ioss associated with the tax. 6*) Wind breakers Market 8: Tax Revenue is Deadweight Loss eases PRICE (Dollars per Windbreaker) a 15 10 El 50100150200250300350400450500550500 DUANTITYMindbreaI-cers] Instead, suppose the government taxes bucket hats. 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 ($25 per hat]. On the tollowlng graph, do tor bucket hats the same thlng you are previously on the graph tor wlho'hreakers. Use the green rectangle [triangle symbols) to shade the area that represents tax revenue for bucket hats. Then, use the black triangle (plus symbols) to shade the area that represents the deao'welght loss assoclatetl wlth the tax. Bucket Hats Market Tax Revenue is Dea dweight Loss sssssasss PRICE (Dollars per hat) u so 100150200250300350400450500550600 QUANTITY {Hats} Complete the followlng table wlth the tax revenue collected and deadwelght loss caused by each of the tax proposals. Tax Revenue Deadweight Loss If the Government Taxes... (Dollars) (Dollars) Windbreakers at $25 per Windbreaker \\:i \\:i Bucket hats at $25 per hat \\:i \\:i 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 v because, all else held constant, taxing a good with a relatively V elastic demand generates larger tax revenue and smaller deadweight loss