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Figure and Table: The Market for Taxi Rides
-(Figure and Table: The Market for Taxi Rides) Look at the figure and table The Market for Taxi Rides. If the government imposes an excise tax of $1 per ride (causing the supply curve to shift upward by that amount), then people who ride taxis will pay _____ of each $1 tax.

Question

Use the following to answer questions:
Figure and Table: The Market for Taxi Rides  
-(Figure and Table: The Market for Taxi Rides) Look at the figure and table The Market for Taxi Rides. If the government imposes an excise tax of $1 per ride (causing the supply curve to shift upward by that amount), then people who ride taxis will pay _____ of each $1 tax.

Quizplus · Accepted Answer

When an excise tax is imposed, the burden of the tax is shared between producers and consumers depending on the price elasticity of demand and supply. In this case, the problem suggests that the tax burden is split equally, meaning consumers will pay $0.50 of the $1 tax.

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