Suppose the government needs to raise 15 billion dollars of revenue with specific taxes on corn and wheat. The demand and supply of corn (in billions of bushels per year) are 11eb6466_bcd6_3a8a_8137_3f193c7e2b8e_SM3055_11 and 11eb6466_bcd6_619b_8137_65f08b217a9c_SM3055_11 . The demand and supply of wheat (also in billions of bushels per year) are 11eb6466_bcd6_619c_8137_31e2a52c354b_SM3055_11 and 11eb6466_bcd6_619d_8137_2f3a5261e5b2_SM3055_11 What taxes on corn and wheat raise this revenue with the smallest total deadweight loss (or equivalently, the greatest aggregate surplus)

Microeconomics 2nd Edition by Douglas Bernheim

Edition 2ISBN: 978-0071287616

Microeconomics 2nd Edition by Douglas Bernheim

Edition 2ISBN: 978-0071287616

Exercise 2

Suppose the government needs to raise 15 billion dollars of revenue with specific taxes on corn and wheat. The demand and supply of corn (in billions of bushels per year) are

and

. The demand and supply of wheat (also in billions of bushels per year) are

and

What taxes on corn and wheat raise this revenue with the smallest total deadweight loss (or equivalently, the greatest aggregate surplus)

Explanation

Verified

The deadweight loss is the decrease in t...