(Figure: Supply Tax) In the accompanying pizza market, with a $2 tax imposed on the sellers, how much of the tax is paid by the buyers and how much of the tax burden is borne by the sellers? Sellers pay all of the $2 tax. Buyers pay all of the $2 tax. Sellers pay $1.50 and buyers pay $0.50 of the tax. Buyers pay $1.50 and sellers pay $0.50 of the tax. PriceSupply $2 tax$12Supply11.50109.50Demand40QuantitySellers nav all of the 2 tay50

In this graph the initial equilibrium is at e where the price is $10 and quantity is 50 units. As a…

Answered: Price Supply $2 tax $12 Supply 11.50 10…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(Figure: Supply Tax) In the accompanying pizza market, with a $2 tax imposed on the sellers, how much of the tax is paid by the buyers and how much of the tax burden is borne by the sellers?

	Sellers pay all of the $2 tax.
	Buyers pay all of the $2 tax.
	Sellers pay $1.50 and buyers pay $0.50 of the tax.
	Buyers pay $1.50 and sellers pay $0.50 of the tax.

Price
Supply $2 tax
$12
Supply
11.50
10
9.50
Demand
40
Quantity
Sellers nav all of the 2 tay
50

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