The graph shown represents a market in which a per unit tax has been imposed.

What is the dollar amount of the tax, and who has the tax been imposed on?
A market in which a per-unit tax has been imposed on the sellers of a good

Choose 1 answer:
(A) $\$ 2.50$ on buyers
(B) $\$ 5$ tax on sellers
(C) $\$ 2.50$ on sellers
(D) $\$ 5$ tax on buyers
(E) $\$ 2.50$ on both buyers and sellers

Question

The graph shown represents a market in which a per unit tax has been imposed.

What is the dollar amount of the tax, and who has the tax been imposed on?
A market in which a per-unit tax has been imposed on the sellers of a good

Choose 1 answer:
(A) $\$ 2.50$ on buyers
(B) $\$ 5$ tax on sellers
(C) $\$ 2.50$ on sellers
(D) $\$ 5$ tax on buyers
(E) $\$ 2.50$ on both buyers and sellers

Accepted Answer

∻Solution∻ ‖ a ⋮ Identification of Tax Amount: The tax amount is the vertical distance between the supply curves $S1$ and $Stax$. Since $S1$ and $Stax$ are parallel, this distance is constant. ‖‖ b ⋮ Calculation of Tax Amount: The vertical distance between $S1$ and $Stax$ represents the per-unit tax. From the graph, this distance is $2.50$. ‖‖ c ⋮ Tax Imposition: The problem states that the tax is imposed on the sellers. ‖ ∻Answer∻ ⚹ $2.50$ on sellers ⚹ ∻Key Concept∻ ⚹ Per-unit tax on sellers ⚹ ∻Explanation∻ ⚹ The tax amount is determined by the vertical distance between the original supply curve ($S1$) and the new supply curve ($Stax$) after the tax is imposed. Since the problem specifies that the tax is on sellers, the correct answer is $2.50$ on sellers. ⚹◊What is the impact of the per unit tax on the equilibrium price and quantity in the market?⍭ Generate me a similar question◊

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