Figure 6-19
-Refer to Figure 6-19.Suppose a tax of $2 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

Question

Figure 6-19 
-Refer to Figure 6-19.Suppose a tax of $2 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

Quizplus · Accepted Answer

When a tax of $2 per unit is imposed, the supply curve shifts upward by $2, as shown in the diagram. The new equilibrium occurs where the new supply curve intersects the original demand curve, at a price of $8 and a quantity between 50 and 100 units. Therefore, the answer is C, between 50 units and 100 units.

Figure 6-19 -Refer to Figure 6-19.Suppose a Tax of $2 Per Unit