Worksheet 7: Consumer and Producer Surplus / Costs of Taxation ECON 102: Principles of Microeconomics DUE: Wednesday, Mar. 27" 2024 - Submit answers on Canvas by 11:59pm Student Name: e Lucky and Darby enjoy quenching their thirst with some soothing Shamrock Shakes on a warm March day. Luckily for Lucky and Darby, St.Donald's is a firm that produces Shamrock Shakes. The market for Shamrock Shakes is represented by the following graph: Shamrock Shakes Answer the following questions based on the information contained in the graph above. In the competitive market for Shamrock Shakes: 1. ot 6. What is the competitive equilibrium price of a Shamrock Shake?: P* =$____________ . What is the competitive equilibrium quantity of Shamrock Shakes?: Q" = Shakes How much Consumer Surplus is created in this market?: CS=%___________ How much Producer Surplus is created in this market?: PS=8$____________ How much Total Surplus is created in this market?: TS=%____ How much Dead Weight Loss is created in this market?: DWL=9$___________ Suppose the government decides that because Shamrock Shakes are so good, a tax of $2/shake should be imposed on the consumers of Shamrock Shakes. 10. 11. 12. 13. Shamrock Shakes S7 S 55 ........................ T 53 0 5 10 Q What price will Consumers now have to pay for a Shamrock Shake?: Pc = $777777777777 What price will Producers now receive for a Shamrock Shake, after the tax?: PP = How many Shamrock Shakes will now be sold?: @ = ____________ Shakes How much Consumer Surplus is created in this market?: CS = $____________ How much Producer Surplus is created in this market?: PS=9$___________ How much total Tax Revenue does the government receive in this market?: TAXREV =_________ How much Dead Weight Loss is created in this market?: DWL=9$____________ Now suppose that the Demand curve is actually slightly more inelastic, and the Supply curve is actually much more elastic than in the previous graphs, as shown in the following figure. Notice that a $2/shake tax is still implemented. 14. 15. 16. 17. 18. 19. 20. Shamrock Shakes What price will Consumers now have to pay for a Shamrock Shake?: Pe=%__________ What price will Producers now receive for a Shamrock Shake, after the tax?: PP = How many Shamrock Shakes will now be sold?: Q= Lattes How much Consumer Surplus is created in this market?: CS =$____________ How much Producer Surplus is created in this market?: PS=% How much Tax Revenue does the government receive in this market?: TAXREV =________ How much Dead Weight Loss is created in this market?: DWL=9$___________