-The above figure shows the demand and supply curves in the market for milk.Currently,the market is in equilibrium.If the government imposes a $2 per gallon tax to be collected from sellers,calculate the dead weight loss associated with the tax,and explain why the dead weight loss occurs.
Definitions:
Taxable Income
The amount of an individual’s or corporation's income used to calculate how much tax they owe to the government, after deductions and exemptions.
Price Elasticities
Measures of the sensitivity of the quantity demanded or supplied of a good to a change in its price.
Tax Burden
The measure of the total amount of taxes that individuals, businesses, or other entities must pay relative to their income or consumption.
Elastic Supply
characterizes a market situation where the quantity supplied changes significantly in response to changes in price.
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