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.Suppose they decided to impose the tax on consumers.In the following graph, shows the effect of a $0.50 tax on each gallon of gasoline sold imposed on consumers by shifting the demand or supply curve. DemandSupply01234563.02.52.01.51.00.50Price of Gasoline (Dollars per gallon)Quantity of Gasoline (Thousands of gallons)Demand   Supply    True or False: The effect of the tax will be the same regardless of whom the tax is imposed on.True False  This tax would be more effective in reducing the quantity of gasoline consumed if the demand for gasoline were    elastic. True or False: Consumers of gasoline are helped by this tax.True False  Workers in the oil industry are    by this tax.

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Asked Sep 30, 2019
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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.
Suppose they decided to impose the tax on consumers.
In the following graph, shows the effect of a $0.50 tax on each gallon of gasoline sold imposed on consumers by shifting the demand or supply curve.
 
DemandSupply01234563.02.52.01.51.00.50Price of Gasoline (Dollars per gallon)Quantity of Gasoline (Thousands of gallons)Demand   Supply   
 
True or False: The effect of the tax will be the same regardless of whom the tax is imposed on.
True
 
False
 
 
This tax would be more effective in reducing the quantity of gasoline consumed if the demand for gasoline were    elastic.
 
True or False: Consumers of gasoline are helped by this tax.
True
 
False
 
 
Workers in the oil industry are    by this tax.
 
 
 
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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.

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a.

The effect of tax will be the same and it would not matter whether the tax is imposed on producers or consumers. This statement is true. It can be shown by the graph below:

With no tax- demand-D, Supply-S, Price- P , Quantity- Q

If the tax is imposed on producers – Supply shifts to S1, Price paid- P1 , Quantity- Q1, Price received- P1-$5...

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S1 PI P P1 50 D1 Quantity nPrice

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