Figure 6-14

-Refer to Figure 6-14. Suppose D₁ represents the demand curve for paperback novels, D₂ represents the demand curve for gasoline, and S₁ is representative of the supply curve for paperback novels as well as the supply curve for gasoline. After the imposition of the $2 tax on paperback novels and on gasoline, the

Question

Figure 6-14

-Refer to Figure 6-14. Suppose D₁ represents the demand curve for paperback novels, D₂ represents the demand curve for gasoline, and S₁ is representative of the supply curve for paperback novels as well as the supply curve for gasoline. After the imposition of the $2 tax on paperback novels and on gasoline, the

Quizplus · Accepted Answer

BThe burden of a tax on buyers and sellers depends on the elasticity of demand and supply. A more inelastic demand (or supply) means that side of the market will bear a larger burden of the tax. Without specific details on the elasticity from the provided codes (D₁, etc.), we can't determine the exact distribution of the tax burden. However, typically, gasoline has a more inelastic demand compared to paperback novels, meaning consumers of gasoline would bear a higher burden of the tax. Similarly, if the supply elasticity differs, it could affect how the tax burden is shared between buyers and sellers. Since the question does not provide explicit information on elasticity, the answer is based on common economic principles regarding the demand for gasoline versus paperback novels.

Figure 6-14 ​

Figure 6-14