Posted by Anonymous on Tuesday, June 23, 2009 at 4:41pm.
I tried finding this URL, but couldn't. Could you tell us something more about this website and the kind of table there?
The following information applies to the market for a particular item in the absence of a unit excise tax.
(Price, Quantity Supplied, Quantity Demanded):
($4,50,200)
($5,75,175)
($6,100,150)
($7,125,125)
($8,150,100)
($9,175,75)
Suppose that the government decides to subject producers of this item to a unit excise tax equal to $2 per unit sold. What is the new market price? (Hint: do not just add 2 to the previous equilibrium price.)
http://img269.imageshack.us/img269/7716/picture1win.png
Here's the link.
Anyone?
Is this the answer:
($8, 100, 100)?
What portion of the tax is paid by producers?
Your answer is a bit brief, but correct. I would expand to say producers get $6 per unit and supply 100, Buyers pay $8 and receive 100, Uncle Same gets $2 each or $200
Prior to the tax, the equilibrium price was $7. Since the price to producers went down by $1 and the price to consumers went up by $1, (1/2) of the total tax was borne by producers.
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