Question

Sleepwalker Com... Spawn # 1.9.9 Am... C Online This Course Student Services My Courses on 1 Use this diagram to answer the questions that follow. Supply with tax ed Price out of Supply on H P G P1 C. D E Po A Demand Quantity What is the size of the tax? What is the equilibrium quantity before the tax? What is the equilibrium quantity with the tax? What is the price consumers pay before taxes? What is the price consumers pay with the tax? What is the price sellers receive before taxes? What is the price sellers recelve with the tax? For the questions below, enter only the letters that are part of the answer, with no spaces or commas IMG-3410 (1) jpg IMG-3410.jpg MacBoc

Answer 1

When a tax is imposed on the sale of a commodity, that adds to the cost of production to the firms. The cost of production will increase and the firms will cut back their production. This is a leftward shift of the supply curve. When the tax is imposed , the price that is paid by the consumers will increase and the price received by the sellers will decrease. The government collects the tax revenue and also there is a dead weight loss associated with the tax.

The size of the tax: .

p2 - po

The equilibrium quantity before tax: .

The equilibrium quantity with the tax: .

The price consumers pay before tax:.

The price consumers pay with the tax:.

The price sellers receive before tax: .

The price sellers receive with the tax:.