Taxes on Producers

On Producers Tax Consumers Surplus Consumers Pay Tax Deadweight Loss Producers Surplus Producers Pay Tax Price Quantity $12 Price Before Tax: ______ Price Consumers Pay After Tax: ______ Price Producers Get After Tax: ______ Tax Per Unit: ______ Total Tax Revenue: ______ Total Spending by Consumers: ______ Net Revenue for Firms: ______ Who pay more tax? ______ Total Tax Revenue for Government Before Tax: ______ ST $13 $11 S $2 13 12 11 $200 $1300 $1100 D Consumers pay $1 Producers pay $1 100 120 $0

Tax per unit:__________ Total Tax Revenue :__________ Price ST S 12 9 7 6 5 D 2 12 15 Quantity Tax per unit:__________ Total Tax Revenue :__________ Total Spending by consumers :__________ Net Revenue for firms :__________ Who pays more of the tax? __________ How many fewer units are produced because of the tax?___ What was the lost revenue because of the tax? _________ 1.) 5-2=3 2.) 3*12=36 3.) 9*12=108 4.) 6*12=72 5.) Consumers pay two dollars, producers only pay one dollar 6.) 15-12=3 less units are produced 7.)7*15=105-72=33 dollars is the lost revenue

Tax per unit : __________ Total Tax Revenue : __________ Price ST S 18 12 10 8 7 D 3 10 12 Quantity 1.) 7-3 = 4 2.) 4*10 = 40 3.) 12*10 = 120 4.) 8*10=80 5.) They pay the same. Tax per unit : __________ Total Tax Revenue : __________ Total Spending by consumers : __________ Net Revenue for firms : __________ Who pays more of the tax? __________

Total Tax Revenue : _______ Total Spending by consumers : _______ Price ST S 18 12 10 8 7 D 3 10 12 Quantity Tax per unit : _______ Total Tax Revenue : _______ Total Spending by consumers : _______ Net Revenue for firms : _______ Who pays more of the tax? _______ 1.) 7-3 = 4 2.) 4*10 = 40 3.) 12*10 = 120 4.) 8*10=80 5.) They pay the same.

(b) On a new graph, draw and label the result of the government setting an effective price floor on the market for wheat. Identify what happens to the following: (i) Price (ii) Quantity supplied and quantity demanded

2005 AP Micro Free Response