Figure 6-20
-Refer to Figure 6-20.Suppose a tax of $5 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

Question

Figure 6-20 
-Refer to Figure 6-20.Suppose a tax of $5 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

Quizplus · Accepted Answer

A tax of $5 per unit will shift the supply curve upwards by $5, leading to a new equilibrium quantity that is typically less than the original equilibrium quantity but more than the lowest possible quantity, hence between 25 and 50 units.

Figure 6-20 -Refer to Figure 6-20.Suppose a Tax of $5 Per Unit