# Tax on Producers

Producers pay the government a tax per item purchased on the market.

## Example

The government taxes banana producers $4 per banana. The inverse demand is P = 14 - Q_D. The inverse supply is P = 2 + Q_S. With a$4 tax there are 4 million bananas on the market.

The price for consumers is equal to $10. Producers get$6 per banana.

Consumer surplus is CS = \frac{\left( 14 - 10 \right) \times 4}{2} = 8.

Producer surplus is PS = \frac{\left( 6 - 2 \right) \times 4}{2} = 8.

The Government Revenue is G = 4 \times 4 = 16.

Total Surplus is equal to TS = CS + PS +G = 8 + 8 + 16 = 32.

The Dead weight loss is equal to DWL = \frac{\left( 10 - 6 \right) \times \left( 6 - 4 \right)}{2} = 4.

### Question

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