Economics Homework Help

please respond in 50 words each to each discussion below saying why you agree. please no citations thank you!

1. The tax reduces both consumer surplus, producer surplus; therefore, the total surplus will also decrease. A tax reduces the quantity traded, thereby reducing some of the gains from trade. Consumer surplus falls because the price to the buyer rises, and producer surplus (profit) falls because the price to the seller falls. The fall in total surplus (consumer surplus, producer surplus, and tax revenue) is called the deadweight loss (DWL) of the tax. A tax has a DWL because it causes consumers to buy less and producers to sell less, thus shrinking the market below the level that maximizes total surplus. 2. Both the retailer and producer surpluses are reduced by taxes. This is due to the fact that tax imposes an additional burden on both the customer and the manufacturer. As a result, net surplus decreases since both the buyer and the manufacturer bear a tax load. Deadweight loss is the term used to describe the loss. Taxation’s effect on market surplus: The average amount charged for a product would rise as a result of the imposition of a tariff, meaning an increase in the real price. The real price could be higher than the consumer price in this situation, resulting in a negative consumer surplus. Demand for the good falls at higher price levels, resulting in a decrease in market surplus. Producer surplus is reduced when a tax is levied on a certain good and there is a fall in quantity sold when a tax is imposed because the overall price of the good increases with a levy. No matter where tax incidence is imposed, the effect of tax on overall surplus is limited.