The accompanying graphs depict the market for bags of potato chips, which is currently at an equilibrium price of $1.67 per bag
and an equilibrium quantity of 3.33 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. Scroll down to answer all 6 parts of the question
a. Suppose the government levies this tax on manufacturers for each bag of potato chips they produce. Please shift the curve(s) to illustrate this. Price (Shop)
b. What is the price paid per bag by consumers (P.) after the production tax?
c. What is the price received net of tax (Pp) per bag by producers after the production tax?
d. Suppose the government, instead of levying the tax on producers, levies this tax on consumers for each bag of potato chips they purchase. Please shift the curve(s) to illustrate this. Price (S/bag)
a. Suppose the government levies this tax on manufacturers for each bag of potato chips they produce. Please shift the curve(s) to illustrate this. Price (Shop)
b. What is the price paid per bag by consumers (P.) after the production tax?
c. What is the price received net of tax (Pp) per bag by producers after the production tax?
d. Suppose the government, instead of levying the tax on producers, levies this tax on consumers for each bag of potato chips they purchase. Please shift the curve(s) to illustrate this. Price (S/bag)
1 answer:
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