Reference no: EM133128194

Consider a competitive market in the long run where a tax per unit of output is imposed. Let t denote the amount of the tax. Show (graphically!) the effects on equilibrium quantity, the price to consumers, and the price to producers (the producer take-home price) of introducing the tax in a case where the tax will be fully passed along to consumers in a higher price. Show the effect on consumer surplus. Show the amount of tax revenues. You can draw a second graph to show the latter two things if you want. Is there a change in producer surplus? If 50, show it. If not, explain why. (Make sure you label things clearly in our graph or graphs.)