Suppose a commodity tax is levied on a product. The supply curve
is linear and upward sloping and the demand curve is linear and
downward sloping. The tax lowers the consumer surplus by $300 and
lowers the producer surplus by $200. The deadweight loss is $50.
The government tax revenue is $**[Answer]**. Now,
suppose we learned that the tax rate is $10 per unit. The
equilibrium quantity after the tax must
be **[Answer]**. Consequently, we conclude that
the equilibrium quantity traded before the tax must
be **[Answer]**.

(In decimal numbers, with two decimal places, please.)

Community Answer

The reduction in CS and PS due to tax is also equal to the sum of revenue and deadweight loss. If the sum of loss in CS and PS is (300+200)=500 and DWL is 50 , the government revenue is 500-50=$450.The government tax revenue is $[450].Now, suppose we learned that the tax rate is $10 per unit. Revenue is tax * quantit ... See the full answer