Figure 4-9 Figure 4-9 shows the market for cigarettes.The government plans to impose a per-unit tax in this market.
-Refer to Figure 4-9.What is the size of the per-unit tax?

Question

Figure 4-9  Figure 4-9 shows the market for cigarettes.The government plans to impose a per-unit tax in this market.
-Refer to Figure 4-9.What is the size of the per-unit tax?

Quizplus · Accepted Answer

The per-unit tax is shown by the vertical shift of the supply curve from S0 to S1. The distance between S0 and S1 at the original quantity of 10 billion cigarettes is $5, which is the size of the per-unit tax.

Figure 4-9 Figure 4-9 Shows the Market for Cigarettes