Consider the market for gasoline, illustrated in the figure to the right. Suppose the government adds a $0.75 per gallon excise tax on gasoline, which shifts the supply curve from S₁ to S₂, as illustrated. What is the tax incidence? Consumers pay $ of the tax and producers pay $ of the tax. (Enter your responses rounded to two decimal places.) When the demand for a product is more elastic than supply, consumers pay of the tax on the product. the majority a minority Price (dollars per gallon) 5.50 5.00- 4.50 4.00 3.50 3.00- 2.50- 2.00- 1.50- 1.00- 0.50- 0.00+ S₂ S₁ 8 10 12 14 16 18 20 22 24 26 Quantity (billions of gallons)

Consider the market for gasoline, illustrated in the figure to the right. Suppose the government adds a $0.75 per gallon excise tax on gasoline, which shifts the supply curve from S₁ to S₂, as illustrated. What is the tax incidence? Consumers pay $ of the tax and producers pay $ of the tax. (Enter your responses rounded to two decimal places.) When the demand for a product is more elastic than supply, consumers pay of the tax on the product. the majority a minority Price (dollars per gallon) 5.50 5.00- 4.50 4.00 3.50 3.00- 2.50- 2.00- 1.50- 1.00- 0.50- 0.00+ S₂ S₁ 8 10 12 14 16 18 20 22 24 26 Quantity (billions of gallons)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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