Use the following to answer questions:
Figure: Supply Tax
-(Figure: Supply Tax) In the accompanying pizza market, with a $2 tax imposed on the sellers, how much do buyers pay for a pizza?
A) $12
B) $11.50
C) $10
D) $9.50

Question

Use the following to answer questions:
Figure: Supply Tax 
-(Figure: Supply Tax) In the accompanying pizza market, with a $2 tax imposed on the sellers, how much do buyers pay for a pizza?
A) $12 
B) $11.50 
C) $10 
D) $9.50

Quizplus · Accepted Answer

With a $2 tax imposed on sellers, the supply curve shifts upward by $2. The new equilibrium is at point E', where the new price is $12 and the quantity sold has decreased to 150 pizzas. Therefore, buyers pay $11.50 for a pizza.

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