(Figure: A Market with a Tax) Use Figure: A Market with a Tax.The excise tax imposed on this good is equal to:

A) P₁ - P₂.
B) P₁ - P₃
C) P₂ - P₃.
D) P₁ - P₅.

Question

(Figure: A Market with a Tax) Use Figure: A Market with a Tax.The excise tax imposed on this good is equal to:A) P 1  - P 2 .B) P 1  - P 3 C) P 2  - P 3 .D) P 1  - P 5 .

Shamerra Smith · Accepted Answer

Final Answer : B, Explanation :  To calculate the excise tax, we need to find the difference between the price paid by buyers before and after the tax is imposed. Therefore, the excise tax on this good is equal to P 1  - P 3 . Essentially, the tax causes the supply curve to shift to the left, resulting in a new equilibrium point where buyers pay a higher price and sellers receive a lower price.

(Figure: A Market with a Tax) Use Figure: A Market with a Tax.The excise tax imposed on this good is equal to:

A) P₁ - P₂.
B) P₁ - P₃
C) P₂ - P₃.
D) P₁ - P₅.

Definitions

Learning Objectives

Learning Objectives

Related questions

(Figure: A Market with a Tax) Use Figure: A Market with a Tax.The excise tax imposed on this good is equal to:A) P1 - P2.B) P1 - P3C) P2 - P3.D) P1 - P5.

Definitions

Learning Objectives

Learning Objectives

Related questions

(Figure: A Market with a Tax) Use Figure: A Market with a Tax.The excise tax imposed on this good is equal to:

A) P₁ - P₂.
B) P₁ - P₃
C) P₂ - P₃.
D) P₁ - P₅.