Suppose an individual is selling a car and has a bottom line

Suppose an individual is selling a car and has a \"bottom line\" of $22,000. Also suppose that another dollar\" of $23,000. individual is looking to purchase a car, with a \"top the buyer\'s top dollar. The total surplus from such a A wealth-creating transaction is possible, since the seller\'s bottom line is purchase would be Suppose the government imposes a tax of $4,000 on the purchase of a car. With this tax, the wealth-creating sale of the car between these two buyers will take place.

Solution

A transaction in the market takes place if:

Seller\'s willingness to sell is less than Buyer\'s willingness to buy.

Total Surplus = $23,000 - $22,000 = $1,000.

If the tax is imposed on buyer\'s purchase then Buyer\'s willingness to buy is less than Seller\'s willingness to sell.

Then, transaction in market no longer takes place because seller is not going to sell and buyer is not going to buy