CONNECT F/MICROECONOMICS
21st Edition
ISBN: 2810022151240
Author: McConnell
Publisher: MCG
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Question
Chapter 20, Problem 5RQ
To determine
Impact of the excise tax on the society.
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5
Refer to Figure 8-2. The per-unit burden of the tax on sellers is
a. $3.
b. $5.
c. $2.
d. $4.
The vertical distance between points A and B represents a tax in the market.
PRICE
12
11
10
9
8
07
(O
5
4
Figure 8-2
3
2
1
A
B
Supply
Demand
0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0
QUANTITY
Figure: Commodity Tax
Price
$2.25
1.75
1.50
0
100 200
325
400
D₂ D₁
Quantity
If a $0.75 tax is imposed on sellers of candy bars, the new equilibrium is:
O 325 candy bars at $2.25 each.
325 candy bars at $1.50 each.
325 candy bars at $1.75 each.
400 candy bars at $2.25 each.
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