Use the figure below illustrating the impact of an excise tax to answer the following question(s).
Figure 4-6

Refer to Figure 4-6. The amount of the excise tax I is
A) $.50.
B) $1.50.
C) $1.00.
D) $2.00.

Question

Use the figure below illustrating the impact of an excise tax to answer the following question(s).
Figure 4-6

Refer to Figure 4-6. The amount of the excise tax I is
A) $.50. 
B) $1.50. 
C) $1.00. 
D) $2.00.

Quizplus · Accepted Answer

The excise tax is reflected in the difference between the original price (P0) and the new price paid by consumers (P1). From the graph, we see that P0 is $4.00 and P1 is $3.00, so the excise tax is $1.00 ($4.00 - $3.00). Therefore, the correct answer is C.

Use the Figure Below Illustrating the Impact of an Excise