Now let’s add in the taxes raised from both consumers and producers. For consumers, the taxes are a rectangle that has a bottom left corner at quantity=0, price=non-tax price and an upper right corner at quantity=quantity in equilibrium, price=consumer price. The rectangle for producer tax has a bottom left corner at quantity=0, price=producer price and a top right corner at quantity= quantity in equilibrium, price=non-tax price. These two rectangles have area equal to the respective taxes raised, and the two areas added together equals the total taxes raised. Total taxes raised also equals tax*quantity.

rect1 = patches.Rectangle((0,nonTaxPrice),equilibriumQ,equilibriumP1-nonTaxPrice,linewidth=1,facecolor="red")
rect2 = patches.Rectangle((0,nonTaxPrice),equilibriumQ,equilibriumP2-nonTaxPrice,linewidth=1,facecolor="yellow")
currentAxis.add_patch(rect1)
currentAxis.add_patch(rect2)

Let’s also add a legend to represent each of our new shapes. We feed the legend an array of the objects, followed by labels for each object

plt.legend([rect1,rect2,triangle1,triangle2], ["Consumer Tax","Producer Tax","Consumer Deadweight Loss","Producer Deadweight Loss"])

We should also add in some print statements to see what the taxes collected looks like.

print("Taxes raised from consumers equals "+str(equilibriumQ*(equilibriumP1-nonTaxPrice)))
print("Taxes raised from producers equals "+str(equilibriumQ*(nonTaxPrice-equilibriumP2)))
print("Total taxes raised equals "+str(equilibriumQ*tax))

The updated function….

import sympy
import matplotlib.pyplot as plt
import matplotlib.patches as patches
p = sympy.Symbol("p")
q = sympy.Symbol("q")
cTax = sympy.Symbol("cTax")
pTax = sympy.Symbol("pTax")

def EquilibriumTax(demandEquation,supplyEquation,priceStart,priceEnd,tax):
    prices = []
    demand = []
    supply = []
    for price in range(priceStart,priceEnd+1):
        prices += [price]
        demand += [demandEquation.subs(p,price)]
        supply += [supplyEquation.subs(p,price)]



    nonTaxPrice = sympy.solve(demandEquation-supplyEquation)[0]
    nonTaxQ = demandEquation.subs(p,nonTaxPrice)


    equilibriumQ = eqSolve(demandEquation,supplyEquation,tax)
    equilibriumP1 = sympy.solve(demandEquation-equilibriumQ)[0]
    equilibriumP2 = sympy.solve(supplyEquation-equilibriumQ)[0]

    triangle1 = patches.Polygon([[nonTaxQ,nonTaxPrice],[equilibriumQ,nonTaxPrice],[equilibriumQ,equilibriumP1]],True,color="green")
    triangle2 = patches.Polygon([[nonTaxQ,nonTaxPrice],[equilibriumQ,nonTaxPrice],[equilibriumQ,equilibriumP2]],True)
    currentAxis = plt.gca()
    currentAxis.add_patch(triangle1)
    currentAxis.add_patch(triangle2)


    rect1 = patches.Rectangle((0,nonTaxPrice),equilibriumQ,equilibriumP1-nonTaxPrice,linewidth=1,facecolor="red")
    rect2 = patches.Rectangle((0,nonTaxPrice),equilibriumQ,equilibriumP2-nonTaxPrice,linewidth=1,facecolor="yellow")
    currentAxis.add_patch(rect1)
    currentAxis.add_patch(rect2)

    plt.plot(demand,prices)
    plt.plot(supply,prices)


    plt.legend([rect1,rect2,triangle1,triangle2], ["Consumer Tax","Producer Tax","Consumer Deadweight Loss","Producer Deadweight Loss"])
    plt.plot(equilibriumQ,equilibriumP1, 'ro')
    plt.plot(equilibriumQ,equilibriumP2, 'ro')
    plt.xlabel("Supply and Demand Quantity")
    plt.ylabel("Price")
    plt.show()
    print("The equilibrium prices are "+str(equilibriumP1)+" and "+str(equilibriumP2)+" and equilibrium quantity is "+str(equilibriumQ)+".")
    print("Taxes raised from consumers equals "+str(equilibriumQ*(equilibriumP1-nonTaxPrice)))
    print("Taxes raised from producers equals "+str(equilibriumQ*(nonTaxPrice-equilibriumP2)))
    print("Total taxes raised equals "+str(equilibriumQ*tax))
EquilibriumTax(10-p,p,0,10,4)