1. Graph description: Price is on the Y-axis and Quantity is on the X-axis. There is a downward sloping demand curve labeled Demand with a Y-intercept of $12 and an upward sloping supply curve labeled Supply with and Y-intercept of $2. At the initial equilibrium point, the price is $8 and the quantity is 40. After the tax in the market, the price on the demand curve is $10 and is associated with point A. The price on the supply curve is $5 and is associated with point B. The quantity when there is a tax in the market is 20 units.

2.. Calculate the lost value and shade in the area that represents a deadweight loss on the graph.

The lost value is the area between the demand and supply curves, which is represented by the shaded area on the graph

Price 20 18 16 14 + 12 Demand 10 20 30 40 50 60 70 80 Quantity