Use the following to answer question:
Figure: An Excise Tax
-(Figure: An Excise Tax) Look at the figure An Excise Tax. If an excise tax equal to $1.10 is imposed on this good, then the price paid by consumers will:

Question

Use the following to answer question:
Figure: An Excise Tax 
-(Figure: An Excise Tax) Look at the figure An Excise Tax. If an excise tax equal to $1.10 is imposed on this good, then the price paid by consumers will:

Quizplus · Accepted Answer

The price paid by consumers will rise by less than the full amount of the tax ($1.10) due to the tax burden being shared between consumers and producers. The exact amount depends on the relative elasticities of supply and demand. In this case, it is given as $0.50.

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