Sofia pays Sam $50 to mow her lawn every week. When the government levies a mowing tax of $10 on Sam, he raises his price to $60. Sofia continues to hire him at the higher price.
What is the change in producer surplus, change in consumer surplus, and deadweight loss?
$0, -$10, $0
In this case, the entire tax is passed to Sofia, the consumer. Therefore, there is no change in producer surplus, because the price received by Sam remains the same, but there is a decrease of $10 in consumer surplus because Sofia now pays $10 more than before. Since no mutually beneficial transactions are lost as a result of the tax, all of the decrease in consumer surplus goes to government revenue. Therefore, overall surplus remains the same, and deadweight loss is zero. See Section: How a Tax Affects Market Participants.