Refer to exhibit 20-2. the market for good x is initially in equilibrium at $5. the government then places a per-unit tax on good x, as shown by the shift of s1 to s2. approximately what percentage of the tax do producers end up paying

Question

Business

Dylan Russo

23 February, 07:56

Refer to exhibit 20-2. the market for good x is initially in equilibrium at $5. the government then places a per-unit tax on good x, as shown by the shift of s1 to s2. approximately what percentage of the tax do producers end up paying

+3

Answers (1)

Know the Answer?

Colton Morse · Answer 1

45%

Explanation:

The market for good x is initially in equilibrium at $5. the government then places a per-unit tax on good x, as shown by the shift of s1 to s2.

As a result of the shift in the supply curve a new equilibrium price is established at $6.25

That implies that the share of the burden that consumers will bear is $1.25 (which represents 55% portion of the tax) - the difference between the previous and new equilibrium prices.

The other 45% portion of the tax will be borne by the producers