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2 November, 03:59

Suppose a $3 per-unit tax is placed on this good. the per-unit burden of the tax on sellers is

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  1. 2 November, 04:24
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    Suppose a $3 per-unit tax is placed on this good. the per-unit burden of the tax on sellers is $1.

    Explanation:

    The demand curve and the production curve are cross-secting before the tax level reaches $4.

    The supply curve moves to the left when the tax of $3 was levied, so that the new price payable by consumers is $6 where the new supply curve and the demand curve intersect, while the seller collects $3 where the original supply curve and the demand curve intersects.

    hence, the per unit burden of the tax imposed on buyers is $6 - $4 = $2

    while the burden on sellers is $4 - $3 = $1
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