Economics 12th Edition by William Baumol, Alan S Blinder

Exercise 4

Now suppose the supply schedule is instead as follows:

a. What are the equilibrium price and equilibrium quantity in the absence of a tax
b. What are the equilibrium price and equilibrium quantity in the presence of a $1.25 per carton excise tax
c. Explain why your answer to part b differs from your answer to part b of the previous question, and relate this difference to the discussion of the incidence of an excise tax in this chapter.