Multiple Choice
Refer to the graph. Assume the market for this product is in equilibrium at the intersection of D ₂ and S ₁. The shift in supply from S ₁ to S ₂ is due to an excise tax imposed on the product. The incidence of the tax is
A) $1 from the buyers and $3 from the sellers.
B) $3 from the buyers and $3 from the sellers.
C) $1 from the buyers and $1 from the sellers.
D) $4 from the buyers and $0 from the sellers.
Correct Answer:
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