The graphs show the market for bags of potato chips, which is currently at an equilibrium price of $1.33 per bag and an equilibrium quantity of 5.33 million bags. Suppose that, in an attempt to lower blood pressure and reduce healthcare costs, the government imposes a $1.00 excise (or commodity) tax on potato chips. Suppose the government levies this tax on manufacturers for each bag of potato chips they produce. Please shift the appropriate curve or curves to illustrate this. Price ($ per bag) 5.0 4.5 4.0 3.5 3.0 2.0 What is the price paid per bag by consumers (Pc) with this new tax? What is the price received net of tax (Pp) per bag by producers with this new tax? 2.5 Supply 1.5 1.0 0.5 0.0 0 1 2 3 4 P₁ = $ P₁ = $ 5 Demand 6 7 8 9 10 Quantity (millions of bags)

The graphs show the market for bags of potato chips, which is currently at an equilibrium price of $1.33 per bag and an equilibrium quantity of 5.33 million bags. Suppose that, in an attempt to lower blood pressure and reduce healthcare costs, the government imposes a $1.00 excise (or commodity) tax on potato chips. Suppose the government levies this tax on manufacturers for each bag of potato chips they produce. Please shift the appropriate curve or curves to illustrate this. Price ($ per bag) 5.0 4.5 4.0 3.5 3.0 2.0 What is the price paid per bag by consumers (Pc) with this new tax? What is the price received net of tax (Pp) per bag by producers with this new tax? 2.5 Supply 1.5 1.0 0.5 0.0 0 1 2 3 4 P₁ = $ P₁ = $ 5 Demand 6 7 8 9 10 Quantity (millions of bags)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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