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Social ScienceConider a perunit taxin a mariketPrictJUPelyOemandOUant HyIntridvie a per unH tax ntO trdiagram. Labl t ntwqUartty, thentw Vuutr l(onsumtrj prict and renew stiler (priductr prIceEaUiivium
Hello I need help with introducing a per unit tax into this diagram? Also How do I do this,label the quantity, the new buyer (consumer) price and the new seller (producer) price?
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Conider a per unit taxin a mariket Prict JUPely Oemand OUant Hy Intridvie a per unH tax ntO tr diagram. Labl t ntwqUartty, the ntw Vuutr l(onsumtrj prict and re new stiler (priductr prIce EaUiivium
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Imposition of per unit tax can be represents as follows: Price 20 (dollars per pizza) Supply, S 12 10 8 Demand 200 Quantity (millions of pizzas) 0 80 100 0o
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In the figure horizontal axis measures the quantity and vertical axis measures the price. The equilibrium in the market is achieved at the point where the demand curve intersects with supply curve each other, where the quantity demanded is 100 units and the price is $10.
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Since per unit tax is not given, assume government impose a per unit tax of $4 on the commodity (for example, pizza), then the supply will reduce and supply curve will shift to the left as S2. As a result, price increased as $12 and quantity demanded decreased as 80 units. Before imposing tax, the consumer pays $10 per pizza; but after imposing tax he have to pay $12 per pizza. On the other hand, the seller receives $10 per pizza before imposing tax; but he receives $8 after imposing tax
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