Question

Consider the market below

 a. Suppose there is a $15 per unit tax levied on sellers. Draw the after-tax supply curve. 

b. Plot the after-tax price received by consumers and the after-tax price paid by sellers.

Answer 1

Answer 2

When the per unit tax is imposed on the sellers they would decrease the production and the supply curve would shift up and the vertical distance between the new and the old supply curve shows the per unit tax. The price sellers receive is 25 and the price buyers pay is 40.

Answer 3

When the per unit tax is imposed on the sellers they would decrease the production and the supply curve would shift up and the vertical distance between the new and the old supply curve shows the per unit tax. The price sellers receive is 25 and the price buyers pay is 40.