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Prob Set KTCC
Prob Set KTCC
Prob Set KTCC
pieces. The government decided to levy a consumption tax of VND 6,000 per school bag. Please
indicate: a. What is market equilibrium, producer surplus, and consumer surplus before taxes? b.
What is total tax revenue, tax burden paid by producers and consumers, and change in producer
surplus and consumer surplus after taxes? c. What is the total deadweight loss of the society by
consumption tax? deadweight loss from consumers’ and producers’ sides? 3. With the market for
school bags as stated in Exercise 2, instead of levying a consumption tax, the government aims to
encourage the learning production firms, so it decides to subsidize a production subsidy of VND
3,000 per school bag. Please indicate: a. What is market equilib