Suppose a $5 tax is imposed on buyers 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 a tax is imposed on buyers, the demand curve shifts downward by the amount of the tax, in this case by $5. The new equilibrium price and quantity is where the new demand curve intersects the supply curve. The new price is $13 and the quantity is 6. Therefore, the tax-inclusive price paid by the buyers is $13.

Suppose a $5 Tax Is Imposed on Buyers in the Market