Figure 6-15

-Refer to Figure 6-15.Suppose a tax of $2 per unit is imposed on this market.How much will sellers receive per unit after the tax is imposed?

Question

Figure 6-15
 
-Refer to Figure 6-15.Suppose a tax of $2 per unit is imposed on this market.How much will sellers receive per unit after the tax is imposed?

Quizplus · Accepted Answer

Before the tax, sellers received $7 per unit (point E on the supply curve). After the tax, the supply curve shifts upward by the amount of the tax ($2), to S+tax. The new equilibrium price is determined at the intersection of S+tax and D (point F). Sellers will now receive $5 per unit (point G on the original supply curve minus the tax of $2). Therefore, the sellers will receive between $3 and $5 per unit after the tax is imposed.

Figure 6-15 -Refer to Figure 6-15.Suppose a Tax of $2 Per Unit