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The following graph represents the demand and supply for pinckneys (an imaginary product). The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario.

Respuesta :

okpalawalter8

The  Deadweight loss and Producer surplus after the tax is imposed  mathematically are given as

  • D= C + E
  • PS=F

What is Deadweight Loss?

Generally, the equation for "Before the tax is levied, there is a consumer surplus." is  mathematically given as

X = A + B + C

and Before the tax was implemented, the total well-being

Y= A + B + C + D + E + F

Total well-being after the imposition of the tax

Z = A + B + D + F

In conclusion, Deadweight loss

D = Y-Z

D= (A + B + C + D + E + F ) - ( A + B + D +F)

D= C + E

Read more about Deadweight loss

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