Consider a perfectly competitive market with market supply QS = -2 + P and market demand QD = 40 - P/2.

85 = - 2 + PQ = 40 - 1/2Tax = $ 6 per widLet's assume the tax is on the sellers.This would shift the supply cwere upby the amount of the tax.Q5 = - 2 + PP = Qs+ 27 P' = Q5 + ( 2 + 6 ) : New is Curve.* P' = Q5+8.Of = P'- 8P32DWL = areaAE'EL28 102626 .At new equilibrium :Q5" = QD + P - 8 = 40- 1/23 P / 2 = 48 = P = 328 = P- 8 = 24.8' = 24, Pb = 32 , Pg = Pp - t =" is = 32 - 6 = 26.At original equilibrium :& = QD 3 - 2 + P= 40- P/242 = 3P/2 2 P= 289 = - 2 + P 2 6 = 26DWL = 1 * (32- 26) ( 26- 24) 2 1X6*2DWL = $ 6