Congress and the president decide that the UnitedStates should reduce air pollution by reducing its useof gasoline. They impose a $0.50 tax on each gallon ofgasoline sold.a. Should they impose this tax on producers orconsumers? Explain carefully using a supply-anddemand diagram.

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ISBN:9781337091992
Author:N. Gregory Mankiw
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Chapter6: Supply, Demand And Government Policies
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Congress and the president decide that the United
States should reduce air pollution by reducing its use
of gasoline. They impose a $0.50 tax on each gallon of
gasoline sold.
a. Should they impose this tax on producers or
consumers? Explain carefully using a supply-anddemand diagram.

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