Suppose the pretax price of gasoline is $1 per gallon.A tax of $0.50 is imposed and is paid by consumers to the government.What must the gross price of gasoline be after the tax so that the consumer tax burden is equal to the producer tax burden?

Question

Quizplus · Accepted Answer

The consumer tax burden is equal to the producer tax burden when the gross price of gasoline is $1.50. This is because the consumer pays $0.50 in taxes and the producer receives $0.50 less per gallon in revenue.

Suppose the Pretax Price of Gasoline Is $1 Per Gallon