Use the following to answer question:
-(Figure: A Market with a Tax)Use Figure: A Market with a Tax.The excise tax imposed on this good is equal to:

Question

Use the following to answer question: 
-(Figure: A Market with a Tax)Use Figure: A Market with a Tax.The excise tax imposed on this good is equal to:

Quizplus · Accepted Answer

To calculate the excise tax, we need to find the difference between the price paid by buyers before and after the tax is imposed. Therefore, the excise tax on this good is equal to P₁ - P₃. Essentially, the tax causes the supply curve to shift to the left, resulting in a new equilibrium point where buyers pay a higher price and sellers receive a lower price.

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