ts (For Grade) Smartwork5 Chapter 5, Market Outcomes and Tax Incidence: Homework
ID: 1141940 • Letter: T
Question
ts (For Grade) Smartwork5 Chapter 5, Market Outcomes and Tax Incidence: Homework arket Outcomes and T... 85% 09/27/18 Question (1 point) 3rd attempt The following graph depicts a market where a tax has been imposed. Pe was the equilibrium price before the tax wa was the equilibrium quantity. After the tax, Pc is the price that consumers pay, and Ps is the price that producers red sold after the tax is imposed. NOTE: The areas B and Care rectangles that are divided by the supply curve Sy.Includ those rectangles when choosing your answers S, Pc VIEW SOLUTIONExplanation / Answer
The graph shows that supply curve shifts to the left as the tax is levied and the price paid by buyers rising from equilibrium price to Pc whereas price paid by the producer is Ps. The amount of tax is the wedge between these prices at a lower quantity of output .i.e Qt.
The amount of tax along the y-axis .i.e price level is Pc-Ps
the correct option is B
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