Exhibit 20-2 -Refer to Exhibit 20-2.The market for good X is initially in equilibrium at $5.The government then places a per-unit tax on good X,as shown by the shift of S₁to S₂.As a result,the equilibrium price A) rises from $5.00 to $6.25. B) falls from $5.00 to $4.00. C) remains constant at $5.00. D) none of the above

Question

Quizplus · Accepted Answer

The per-unit tax shifts the supply curve from S1 to S2, leading to a higher equilibrium price as suppliers pass some of the tax burden onto consumers.

Exhibit 20-2 -Refer to Exhibit 20-2.The Market for Good X Is Initially