>> [MUSIC] Let's go ahead and calculate total surplus with the tax. We have, of course the consumers. The consumer surplus is the area underneath the demand curve and above the price that the consumers are paying. So, it's this triangle here. The height is 70 minus 55 which is 15. The base is 15, so we get 15 times 15 divided by two, which is equal to 112.5. What about the producers? Producer surplus is the area underneath the price that the producers are getting. Which in this case, is 40, and above the supply curve, so it's this triangle here. And again, an area of a triangle is height times base divided by two. The height here is 40 minus 10, which is 30. The base is 15. So, we get 30 times 15 divided by two, and that is 225. But let's not forget the government. We have the government involved, because the government is collecting tax revenue. And we can see their tax revenues in our graph. It is the $15 that the government is collecting per unit, times all the units that are being sold in this market. And in this case, it's a rectangle with a height of 15 and a base of 15. So, we get 15 times 15, which is also 225. So, these are the tax revenues. If we want to go ahead and calculate total subless. We have to add the consumers to the producers and add the tax revenue and we get a total subless that's equal to 562.5. And we can see that the surplus has dropped. It has dropped, because we move from the top of the hill, weve shrunk the pie. By how much has it dropped? Well, the difference between these two is going to be the dead weight lost. Let's go ahead and make sure that we've done everything correctly. We can see the dead weight loss on our graph, it is this triangle here The height of this triangle, is of course 15. So, when we calculate the dead weight loss. The height of the triangle is 15, because that is the tax of the unit. The width of the triangle is the amount by which we change the quantity. Which in this case is 5, and it's a triangle so base times height divided by 2. And we get a dead weight loss of 37 and a half dollars. And we can see indeed, that the difference between the total surplus before, and the total surplus now. The difference between the two is indeed dead weight loss. So, if you add the new surplus plus the new deadweight loss. You get the original surplus that we started off with.