TPrice 85 80 Supply 15 10 Demand 2 13 14 15 16 17 18 19 20 21 22 23 24 25 Qumrity The figure above represents the quarterly market for Oil Change Services in Snohomish County, WA (quantity in thousands). As you can see, without taxes the market equilibrium is at 10,000 oil changes per quarter, at a price of $45 each. Suppose that, initially, there is no tax in this market, and the streets have lots of potholes. City Council would like to fix the potholes, and this will have an estimated cost of $1,000,000 annually. Council members Carl Smith and Mark Adams submitted the following proposal: "Let us impose a $25 tax on each oil change. Since there are currently 10,000 oil changes per quarter, this would mean that we would collect $250,000 per quarter, or $1,000,000 per year" A) Explain why their reasoning is incorrect. B) What would be the real tax revenue collected from such a tax? C) What would be the welfare cost of such a tax? D) What is this welfare loss called and where does it come from