Welfare Effects of Taxation

🎯 Set Per-Unit Tax

Tax Amount: $0.00

$0 $4 $8

✅ No Tax — Competitive Equilibrium. Total surplus maximized!

Consumer Pays

$10.00

Tax Wedge

$0.00

Producer Receives

$10.00

Market Outcomes:

Consumer Surplus

$50.00

Producer Surplus

$50.00

Tax Revenue

$0.00

Deadweight Loss

$0.00

Total Surplus (CS + PS + Tax Revenue)

$100.00

Detailed Market Conditions
Measure	Value
Per-Unit Tax	$0.00
Equilibrium Price (no tax)	$10.00
Equilibrium Quantity (no tax)	10 units
Price Paid by Consumer	$10.00
Price Received by Producer	$10.00
Quantity Traded with Tax	10 units
Reduction in Quantity	0 units

💡 Key Insight: The market is at competitive equilibrium. Total surplus ($100) is maximized with no deadweight loss.

📘 Concept:

A per-unit tax drives a wedge between what consumers pay and what producers receive. The resulting deadweight loss (DWL = ½ × tax × ΔQ) measures the trades that no longer occur — society's net loss from the tax.