Figure 8-2

-Refer to Figure 8-2.The price that sellers effectively receive after the tax is imposed is
A)P₁.
B)P₂.
C)P₃.
D)impossible to determine from the figure.

Question

Figure 8-2
 
-Refer to Figure 8-2.The price that sellers effectively receive after the tax is imposed is
A)P₁. 
B)P₂. 
C)P₃. 
D)impossible to determine from the figure.

Quizplus · Accepted Answer

The price that sellers effectively receive after the tax is imposed is P₁, because the tax is a per-unit tax, and the sellers will reduce their price by the amount of the tax in order to maintain their profit margin.

Figure 8-2 -Refer to Figure 8-2.The Price That Sellers Effectively Receive After