Question

For Questions 29 and 30, please refer to the following: The State of New Jersey needs to repair sev considering a $0.50 per gallon tax on gasoline 10 p sey needs to repair several major state highways and they are per gallon tax on gasoline to pay for it. Prior to the tax, a gallon of gas in NJ sold for $3.20/gallon. Drivers in New Jersey have an option to take Univers in New Jersey have an option to take buses and instead of drive if they want to. Below is the projected Supply/Demand curve for if the tax goes into effect. The Tax is collected from Gas Stations where gas is sold to drivers. TS $3.55 $3,20 42.90 569407004 29) Of the $.50 tax that is levied, assuming that the money to the government comes either from the buyer paying more or the seller keeping less profit, based on the diagram above including a revised Supply Curve reflecting the tax and the existing Demand Curve, how much of the tax burden falls to the Seller or PUT ANOTHER WAY, how much of the tax per gallon does the Gas Station owner have to pay? (Note: Assume that the New Jersey State Government is going to collect the tax of 8.50/gallon no matter what). A. $0.50 B. $0.00 C. $0.35 D. $0.15 30) Of the $.50 tax that is levied, assuming that the money to the government comes either from the buyer paying more or the seller keeping less profit, based on the diagram above including a revised Supply Curve reflecting the tax and the existing Demand Curve, how much of the tax burden falls to the Buyer or PUT ANOTHER WAY, how much of the tax per gallon does the Buyer/Driver have to pay? (Note: Assume that the New Jersey State Government is going to collect the tax of S.50/gallon no matter what). A. $0.50 $0.00 c. $0.35 D. $0.15

Answer 1

Q-29 Answer - Seller will pay 0.15 per gallon out of .50 per gallon. Q. 30 Ananenc Buyer will pay 0.35 per gallon Before Tax - Price = Pi Tax = Pz-P2 - Always above Pito PL It it is share OF Buyer. It is above the original price that is equal to A-C - P.-P2 U R CB will be the share Producer will pay.