The following data are the market supply and demand schedules for shoelaces, which are products in a competitive market. Suppose in 2020, an excise tax of $ .50 per shoelaces is imposed on the producers. The following table shows the supply and demand schedules for shoelaces in Canada

 

Price                         Quantity of shoelaces demanded (thousands)               Quantity of shoelaces supplied (thousands)

$3.50                                                 66.0                                                                    82.4

$3.25                                                 67.8                                                                    77.6

$3.00                                                  73.8                                                                    73.8

$2.75                                                  80.8                                                                     67.8

$2.50                                                  85.3                                                                     66.0                   

a) What is the tax revenue generated in 2020 from the excise tax?

b) What is the approximate loss of welfare or dead weight loss associated with the excise tax?

c) Suppose on January 1, 2021 the total excise tax will increase to $ 1.00 per shoelaces. How many shoelaces will be purchased? What is the price now?

d) What is the dead weight loss with a $ 1.00 tax. How much tax revenue will be collected.

e) Does this increase in tax (.50 to 1.00) increase or decrease the tax revenue?

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b tax 050 shoelaces quantity sold after tax T af... View the full answer