The image presents a graph illustrating the effect of a per-ticket tax on plane tickets from Boston to Tampa.**Graph Description:**- **Axes:** - The y-axis represents the Price (P) of airline tickets, measured in dollars per ticket. - The x-axis represents the Quantity (Q) of airline tickets, measured in thousands per day.- **Curves:** - There are two supply curves: - $ S_{\text{no tax}} $: The original supply curve without tax. - $ S_{\text{with tax}} $: The supply curve shifted left/upward due to the imposition of the tax.- **Demand Curve:** - $ D $: The demand curve for airline tickets.- **Equilibrium Points:** - Before tax, intersection at a quantity of 3000 (thousands per day) and a price of $200. - After tax, intersection at a quantity of 2850 (thousands per day) and a price of $230.The difference in price points indicates the tax effect shared between consumers and producers.**Question:**"How much of the per-ticket tax is paid by passengers?"**Options:**- $30- $20 (Correct answer)- $10- $40

Answered: 9) The following graph shows the effect…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The image presents a graph illustrating the effect of a per-ticket tax on plane tickets from Boston to Tampa.

**Graph Description:**

- **Axes:**
- The y-axis represents the Price (P) of airline tickets, measured in dollars per ticket.
- The x-axis represents the Quantity (Q) of airline tickets, measured in thousands per day.

- **Curves:**
- There are two supply curves:
- $ S_{\text{no tax}} $: The original supply curve without tax.
- $ S_{\text{with tax}} $: The supply curve shifted left/upward due to the imposition of the tax.

- **Demand Curve:**
- $ D $: The demand curve for airline tickets.

- **Equilibrium Points:**
- Before tax, intersection at a quantity of 3000 (thousands per day) and a price of $200.
- After tax, intersection at a quantity of 2850 (thousands per day) and a price of $230.

The difference in price points indicates the tax effect shared between consumers and producers.

**Question:**

"How much of the per-ticket tax is paid by passengers?"

**Options:**

- $30
- $20 (Correct answer)
- $10
- $40

Expert Solution

Step 1

An excise tax when collected from sellers shifts the supply curve upward by the amount of the tax. This results in consumers purchase a smaller quantity at higher prices while sellers receive only a smaller net price after payment of the tax. Thus consumers and producers share the burden or incidence of a tax.

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