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Your demand curve for pizza is : Q = 400-20P.Currently a pizza costs $10.In an effort to raise revenue, the governor implements a $2 tax
Your demand curve for pizza is : Q = 400-20P.Currently a pizza costs $10.In an effort to raise revenue, the governor implements a $2 tax on pizza which will increase the price to $12.
a. (12 points) Calculate the change in consumer surplus because of the tax.
b. (2 points) How much revenue does this tax raise?
c. (4 points) Calculate the efficiency loss from this tax.
d. (12 points) Graph your results. (consumer surplus, revenue, efficiency loss)
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