Refer to the information provided in Figure 5.7 below to answer the question(s) that follow. Figure 5.7
The above figure represents the market for pumpkins both before and after the imposition of an excise tax, which is represented by the shift of the supply curve.
-Refer to Figure 5.7. The amount the store owners will receive per pumpkin after paying the tax is
A) $1.75.
B) $3.00.
C) $4.25.
D) $7.25.

Question

Refer to the information provided in Figure 5.7 below to answer the question(s) that follow.  Figure 5.7
The above figure represents the market for pumpkins both before and after the imposition of an excise tax, which is represented by the shift of the supply curve.
-Refer to Figure 5.7. The amount the store owners will receive per pumpkin after paying the tax is
A) $1.75. 
B) $3.00. 
C) $4.25. 
D) $7.25.

Quizplus · Accepted Answer

After the tax is applied, the price that buyers pay increases, and the price that sellers receive decreases. The difference between these two prices is the tax amount. If the tax shifts the supply curve upward or the demand curve downward, the new equilibrium price to buyers will be higher, and the price received by sellers will be lower. Without the specific details from Figure 5.7, the general principle is that the amount store owners receive (net of tax) would be the market price minus the tax per unit. Assuming the correct answer accounts for such a tax impact, $4.25 could be the net amount received by store owners per pumpkin after paying the tax, indicating that the tax has been subtracted from the price at which pumpkins were sold.

Refer to the Information Provided in Figure 5