Given, Market price (what Andre earns)=$50 per week. Julia's willingness to pay is $60 per week. Andre's opportunity cost is $30 per week Tax placed govt. equals $35 per week.
Total Surplus = Producer surplus + Consumer surplus = (50−30) +(60−50) = 20 + 10 = $30
Once govt. places a tax of $35 the whole amount of total surplus is taken away (since $35>$30). Thus total surplus is $0.
Thq so much......
Given, Market price (what Andre earns)=$50 per week. Julia's willingness to pay is $60 per week. Andre's opportunity cost is $30 per week Tax placed govt. equals $35 per week.
Pre-tax
Total Surplus = Producer surplus + Consumer surplus = (50−30) +(60−50) = 20 + 10 = $30
Post-Tax
Once govt. places a tax of $35 the whole amount of total surplus is taken away (since $35>$30). Thus total surplus is $0.