(Figure: Market) In the market shown, the original equilibrium price is 60 cents. A tax is then implemented on the buyer. After the implementation of the tax, the seller receives _____ cents per unit of the product.

Question

Quizplus · Accepted Answer

When a tax is implemented on the buyer, the price received by the seller will decrease while the price paid by the buyer will increase. The new equilibrium price will be higher than the original price. In this case, we can see that the new equilibrium price is 62 cents (60 cents original price + 2 cents tax). Since the seller receives the price minus the tax, the seller receives 58 cents per unit of the product (62 cents - 4 cents tax). Therefore, the correct answer is choice A.

(Figure: Market) in the Market Shown, the Original Equilibrium Price