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assume that in a competitive equilibrium, 1,000 units are sold at $20 per unit. following the imposition of a $4.00 per unit tax, the new consumer price is $23, and the new equilibrium quantity is 950 units. what are the values of the tax revenue collected and the deadweight loss?

Answer :

okpalawalter8

Both the tax income collected, totaling $3,800, and the deadweight loss, amounting to  $75, are shown here in their respective monetary amounts.

What exactly does tax revenue mean?

Contributions to social security, income and profit taxes, taxes on property ownership and transfers, sales taxes, and other taxes all contribute to the total amount of money collected by taxation.

Taxes are something that needs to be paid to the government by everyone—individuals, enterprises, and other institutional organizations alike.

Multiple kinds of tax income may be generated through both direct and indirect forms of taxation.

One sort of direct tax is the income tax, and another is the wealth tax. There are two main categories of indirect taxes: sales tax and excise duty.

Calculation

tax income=950*4

tax income=$3800

Deadweight Loss = 0.5 * (P2 - P1) * (Q1 - Q2).

deadweight loss=0.5*(23-20)*(1000-950)

deadweight loss=$75

As a result, tax income of $3,800 and a loss of $75due to deadweight.

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