Figure 4-25

-Refer to Figure 4-25.The price that sellers receive after the tax is imposed is
A)P₁.
B)P₂.
C)P₃.
D)impossible to determine from the figure.

Question

Figure 4-25
 
-Refer to Figure 4-25.The price that sellers receive after the tax is imposed is
A)P₁. 
B)P₂. 
C)P₃. 
D)impossible to determine from the figure.

Quizplus · Accepted Answer

After the tax is imposed, the new supply curve shifts upward by the amount of the tax, which is shown by the vertical distance between P₁ and P₂. The price that sellers receive is shown by the intersection of this new supply curve and the demand curve, which is at point B and equal to P₂. Therefore, the correct answer is B.

Figure 4-25 -Refer to Figure 4-25.The Price That Sellers Receive After the Sellers