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consider a tax the government imposes on a market perviosly in equilibrium.discuss what happen to the...

consider a tax the government imposes on a market perviosly in equilibrium.discuss what happen to the price that consumer pay and the price sellers receive wheb thos tax is implemented.do sellers receive more or less then when there weas an equilibrium?what about a deadweight loss to the economy,does one exist?if so,why
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Answer #1

Initial equilibrium was at point E, where equilibrium price was P

When government imposes tax, supply curve shift to left .

The new equilibrium is at Point E1, where equilibrium price is p1.

Initially. Seller was getting P price ,after tax ,seller is getting P2 .so seller is getting lower price after tax.

Initially consumer was paying P price ,after tax consumer was paying P1 price, so Consumer is paying higher price after tax.

Deadweight loss is loss of surplus due to tax.

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