Question

22. Prior to any taxes, the equilibrium price of gasoline is $3 per gallon. Then a $1-per-gallon tax is levied. As a result, the price of gasoline rises to $3.75 per gallon. The incidence of the $1 tax is _____ paid by consumers and _____ paid by producers.

Answer 1

Answer: 75¢ by consumers

25¢ by producers

Step-by-step explanation:

Answer 2

Answer:

Step-by-step explanation:

After levying a $1 tax on gasoline, the price of gasoilne rose from $3 to $3.75. Thus, $0.75 is paid by the consumer and $0.25 must be paid by the producer.

Hence,

75% of the tax per gallon is paid by the consumer &

25% of the tax per gallon is paid by the producer