+ Question 1: The vertical distance between points E and F represents a tax in the market. Supply PRICE Demand 05 1 15 2 25 3 35 4 45 5 55 6 QUANTITY Refer to the figure above and explain: A). Before the imposition of the tax, what is the total surplus? (.5)(2)($10)=$10. To get 10 you do 12-2 B). The imposition of the tax causes the quantity sold to increase or decrease? And if so, by how many units? Imposition of tax causes the sales to decrease by 1 unit C). The imposition of the tax causes the price paid by buyers to increase or decrease? And if so, by how much Imposition of tax causes the price paid by the buyers to increase by 3 units, ( $9-$6=$3) D). The imposition of the tax causes the price received by sellers to increase or decrease? And if so, by how much? The imposition of tax causes the price received by the sellers to decrease by 2 units. ($6-$4-$2) E). The amount of the tax on each unit of the good is? The amount of tax on cach unit is $5 E-F so 9-4=$5 F). What is the amount of the tax revenue (for the government)? Amount of tax revenue for the government = $5 G). What is the amount of the deadweight loss? Amount of deadweight loss = Total surplus - Tax revenue = $10-5=$5