Figure 12.2 Figure 12.2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 12.2.If the government imposes an excise tax of $1.00 on every unit sold,the consumer's burden of the tax

Question

Figure 12.2  Figure 12.2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 12.2.If the government imposes an excise tax of $1.00 on every unit sold,the consumer's burden of the tax

Quizplus · Accepted Answer

The consumer's burden of the tax is the difference between the price paid by the consumer after the tax and the price they would have paid without the tax (i.e., the original demand curve). This difference is depicted by the vertical distance between the two demand curves intersecting with the supply curve. Thus, the consumer's burden of the tax is P_a-P_c if the supply curve is S₀ and P_b-P_c if the supply curve is S₁. Thus, choice C is the correct answer.

Figure 122 Figure 12