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The Laffer curve

Consider the deadweight loss generated in each of the following cases: no tax, a tax of $20 per case, and a tax of $40 per case. On the following sraph, use the black curve (plus symbols) to Thustrate the deadweight loss in these cases. (Hint: Remember that the area of a triangle is equal to 21 Base Height, In the case of a deadweight loss triangle found on the graph input tool, the base is the amount of the tax and the helght is the reduction in quantity caused by the tax.) As the tax per case increases, deadweight loss As the tax per case increases, deadweight loss Suppose the government imposes a $10-per-case tax on suppliers. At this tax amount, the equilibrium quantity of beer is cases, and the government collects in tax revenue. Now calculate the government's tax revenue if it sets a tax of $0,$10,$20,$25,$30, $40, or $50 per case. (Hint: To find the equihbrium quantity after the tax, adjust the "Quantity" field until the Tax equais the value of the per-unit tax.) Using the data you generate, plot a Laffer curve by using the green points (triangle symbol) to plot total tax revenue at each or those tax levels. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Government-imposed taxes cause reductions in the activity that is being taxed, which has important implications for revenue collections. To understand the effect of such a tax, consider the monthly market for beer; which is shown on the following graph. Use the graph input toor to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey fleld will change accordingty. Suppose the government is currently imposing a $15-per-case tax on beer. True or False: The government can raise its tax revenue by decreasing the per-unit tax on beer. True False

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