The following graph shows the demand and supply for i-Pods. a) What is equilibrium price and quantity?
b) Suppose that a $20 per unit sales tax is placed on the product. Draw in the new supply curve labeled S_tax.
c) What is the new equilibrium price and quantity?
d) What proportion of the tax is paid by the consumer, and what proportion is paid by the seller in this case?

Question

The following graph shows the demand and supply for i-Pods.

a) What is equilibrium price and quantity?
b) Suppose that a $20 per unit sales tax is placed on the product. Draw in the new supply curve labeled S_tax.
c) What is the new equilibrium price and quantity?
d) What proportion of the tax is paid by the consumer, and what proportion is paid by the seller in this case?

Quizplus · Accepted Answer

The Answer of The following graph shows the demand and supply for i-Pods. a) What is equilibrium price and quantity? b) Suppose that a $20 per unit sales tax is placed on the product. Draw in the new supply curve labeled S_tax. c) What is the new equilibrium price and quantity? d) What proportion of the tax is paid by the consumer, and what proportion is paid by the seller in this case?

The Following Graph Shows the Demand and Supply for I-Pods