Figure 6-18

-Refer to Figure 6-18.The effective price sellers receive after the tax is imposed is

Question

Figure 6-18
 
-Refer to Figure 6-18.The effective price sellers receive after the tax is imposed is

Quizplus · Accepted Answer

In Figure 6-18, the tax shifts the supply curve upward by $1.00, from S1 to S2. The new equilibrium price at point P2 is $5.00, which is $1.00 higher than the original equilibrium price at point P1. However, buyers pay the full $1.00 tax, so the price they pay increases from $4.00 to $5.00. The effective price sellers receive after the tax is the price they receive (the price at point P2) minus the amount of the tax ($1.00). Therefore, the effective price sellers receive is $4.00, which is choice B.

Figure 6-18 -Refer to Figure 6-18.The Effective Price Sellers Receive After the Sellers