Exhibit 19-2

Refer to Exhibit 19-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S₁ to S₂. Approximately what percentage of the tax do producers end up paying?

Question

Exhibit 19-2
Exhibit 19-2 Refer to Exhibit 19-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S<sub>1</sub> to S<sub>2</sub>. Approximately what percentage of the tax do producers end up paying? A) 55 percent B) 45 percent C) 70 percent D) 63 percent E) 25 percent

Exhibit 19-2 Refer to Exhibit 19-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S<sub>1</sub> to S<sub>2</sub>. Approximately what percentage of the tax do producers end up paying? A) 55 percent B) 45 percent C) 70 percent D) 63 percent E) 25 percent

Refer to Exhibit 19-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S₁ to S₂. Approximately what percentage of the tax do producers end up paying?

Quizplus · Accepted Answer

To find out what percentage of the tax producers end up paying, we need to look at the difference between the initial equilibrium price ($5) and the new equilibrium price after the tax ($6).

The tax is $1 per unit, so the new equilibrium price is $6 ($5 + $1).

Producers are now receiving $5 per unit, but they have to pay the government $1 per unit in tax, which means they end up with $4 per unit.

So, producers end up paying 25% of the tax ($1 out of $4), while consumers pay the other 75% ($3 out of $4).

Therefore, the correct answer is B) 45 percent.

Exhibit 19-2 ​ Refer to Exhibit 19-2. the Market for Good X Is

Exhibit 19-2 Refer to Exhibit 19-2. the Market for Good X Is