Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Macmillan
Suppose a $1 excise or commodity tax is placed on the purchasers of cans of soda. Use the graph to illustrate the impact this tax
would have on the soda market and answer the questions. Be certain to shift the entire curve, endpoint to endpoint.
Price per can ($)
10
9
80
7
6
3
2
1
Supply
Demand
0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Cans of soda per day (in tens of thousands)
deadweight loss: $ 500
Calculate the deadweight loss of the tax. Enter the answer in thousands.
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