The equations for the demand and supply curves for a particular product are P = 10 - .4Q and P = 2 + .4Q,where P is price and Q is quantity expressed in units of 100.After an excise tax is imposed on the product,the supply equation is P = 3 + .4Q.The excise tax on each unit of the product:

Question

Quizplus · Accepted Answer

The excise tax is the vertical shift in the supply curve. The original supply curve is P = 2 + .4Q, and the new supply curve is P = 3 + .4Q. The vertical shift is 1, so the excise tax is $1 per unit.

The Equations for the Demand and Supply Curves for a Particular