Use the figure below to answer the following question(s).
Figure 4-8

-Refer to Figure 4-8.The supply curve S₁ and the demand curve D indicate initial conditions in the market for soft coal.A $40-per-ton tax on soft coal is levied,shifting the supply curve from S₁ to S₂.Which of the following states the actual burden of the tax?
A)$10 for buyers and $30 for sellers
B)$30 for buyers and $10 for sellers
C)The entire $40 falls on sellers.
D)The entire $40 falls on buyers.

Question

Use the figure below to answer the following question(s).
Figure 4-8
 
-Refer to Figure 4-8.The supply curve S₁ and the demand curve D indicate initial conditions in the market for soft coal.A $40-per-ton tax on soft coal is levied,shifting the supply curve from S₁ to S₂.Which of the following states the actual burden of the tax?
A)$10 for buyers and $30 for sellers 
B)$30 for buyers and $10 for sellers 
C)The entire $40 falls on sellers. 
D)The entire $40 falls on buyers.

Quizplus · Accepted Answer

The tax shifts the supply curve upward by $40, which means that the price paid by buyers increases by $40 and the price received by sellers decreases by $40. Therefore, the actual burden of the tax is $10 for buyers and $30 for sellers.

Use the Figure Below to Answer the Following Question(s)