Show the impact of an excise tax imposed on the product

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Reference no: EM131776304

Question: 1. Draw a demand/supply graph with the following characteristics:

- The price elasticity of demand is -0.5

- The price elasticity of supply is 2

- Label the equilibrium price, P1 and the equilibrium quantity, Q1.

2. Show the impact of an excise tax imposed on this product:

- Use the label Pb to indicate the price paid by the buyer after the tax

- Use the label Ps to indicate the price received by the seller after the tax

- Use the label A to indicate the consumer surplus after the tax

- Use the label B to indicate the producer surplus after the tax

- Use the label C to indicate the tax revenue received by the government

- Use the label D to indicate the deadweight loss as a result of the tax

Reference no: EM131776304

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