2. Taxes and welfare Consider the market for commercial fans. The following graph shows the demand and supply for commercial fans before the government imposes any taxes. First, use the black point...

Extracted text: 2. Taxes and welfare Consider the market for commercial fans. The following graph shows the demand and supply for commercial fans before the government imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of commercial fans in the absence of a tax. Then use the green point (triangle symbol) to shade the area representing total consumer surplus (CS) at the equilbrium price. Next, use the purple point (diamond symbol) to shade the area representing total producer surplus (PS) at the equilibrium price.


Extracted text: Before Tax 150 135 Equilibrium Demand 120 105 Consumer Surplus 90 75 Producer Surplus 60 45 Supply 30 15 100 90 70 10 20 30 40 50 60 QUANTITY (Fans) PRICE (Dollars per fan) 80