{MISSING IMAGE}Suppose an $8 tax is imposed on sellers in the market shown in the graph. What will be the tax-inclusive price paid by the buyers as a result of this tax?

Question

Quizplus · Accepted Answer

When the tax is imposed on the sellers, the supply curve shifts upwards by the amount of the tax. This means that for any given quantity, the price that sellers receive is $8 lower than before the tax.

To find the new equilibrium price and quantity, we need to find where the new supply curve intersects with the original demand curve, taking into account the $8 tax.

At the new equilibrium, sellers receive a price of $18 ($26 - $8), and buyers pay a price of $22 ($18 + $4). Therefore, the tax-inclusive price paid by the buyers is $22.

{MISSING IMAGE}Suppose an $8 Tax Is Imposed on Sellers in the Market