Question

The below 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. Please scroll down to answer all 6 questions. Suppose the government levies this tax on manufacturers for each bag of potato chips they produce. Please shift the curve(s) to illustrate this. Suppose the government levies this tax on consumers for each bag of potato chips they purchase. Please shift the curve(s) to illustrate this What is the price paid per bag by consumers after this production tax (in Question 1)? What is the price paid per bag by consumers after this consumption tax (in Question 2)? What is the price received per bag by producers after this production tax (in Question 1)? What is the price received per bag by producers after this consumption tax (in Question 2)?

Answer 1

Number 1: Shift supply curve up so the equilibrium price is 2.

Number 2: Shift demand curve so equilibrium price is 1.

Number 3: 2

Number 4: 1

Number 5: 2

Number 6: 1

Just got done doing this question myself on saplinglearning.com and I was correct.