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-The Above Figure Shows the Market for Gourmet Ice Cream

Question 10

Multiple Choice

  -The above figure shows the market for gourmet ice cream. In an effort to reduce obesity, the government places a $2 tax per litre on suppliers in this market, shifting the supply curve from S0 to S1. The tax incidence is A)  split equally between consumers and producers, each paying $2 per litre. B)  such that producers pay all of the tax. C)  such that consumers pay $1 per litre and producers pay $2 per litre. D)  split equally between consumers and producers, each paying $1 per litre. E)  such that consumers pay $2 per litre and producers pay $1 per litre.
-The above figure shows the market for gourmet ice cream. In an effort to reduce obesity, the government places a $2 tax per litre on suppliers in this market, shifting the supply curve from S0 to S1. The tax incidence is


A) split equally between consumers and producers, each paying $2 per litre.
B) such that producers pay all of the tax.
C) such that consumers pay $1 per litre and producers pay $2 per litre.
D) split equally between consumers and producers, each paying $1 per litre.
E) such that consumers pay $2 per litre and producers pay $1 per litre.

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