Once the government imposes a Tax per unit sold in a market, the following will occur, EXCEPT: Question 11 options: The (after tax) price paid by the consumer will increase and the (after tax) price received by the producer will decrease. The Tax will reduce consumer's and producer's surpluses (net benefits) The tax will generate a DWL (dead weight loss). The tax will have a higher tax incidence on the most relatively Elastic sector (demand or supply)

Per unit tax is a fixed amount charged by the government for each unit of good being sold.

Answered: Once the government imposes a Tax per…

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 25SQ

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Once the government imposes a Tax per unit sold in a market, the following will occur, EXCEPT:

Question 11 options:

	The (after tax) price paid by the consumer will increase and the (after tax) price received by the producer will decrease.
	The Tax will reduce consumer's and producer's surpluses (net benefits)
	The tax will generate a DWL (dead weight loss).
	The tax will have a higher tax incidence on the most relatively Elastic sector (demand or supply)

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

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