Figure 17-2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 17-2. If the government imposes an excise tax of $1.00 on every unit sold, the consumer's burden of the tax
A) is Pa - Pc under either supply curve.
B) is Pb - Pc under either supply curve.
C) is Pa - Pc if the supply curve is S0 and Pb - Pc if the supply curve is S1.
D) is Pa - Pd if the supply curve is S0 and Pb - Pe if the supply curve is S1.

Question

Figure 17-2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 17-2. If the government imposes an excise tax of $1.00 on every unit sold, the consumer's burden of the tax
A) is Pa - Pc under either supply curve. 
B) is Pb - Pc under either supply curve. 
C) is Pa - Pc if the supply curve is S0 and Pb - Pc if the supply curve is S1. 
D) is Pa - Pd if the supply curve is S0 and Pb - Pe if the supply curve is S1.

Quizplus · Accepted Answer

The consumer's burden of the tax is the difference between the price consumers pay after the tax and the price they paid before the tax. If the supply curve is S0, the price increases from Pc to Pa, and if the supply curve is S1, the price increases from Pc to Pb.

Figure 17-2 Shows a Demand Curve and Two Sets of Supply