Question
Asked Nov 1, 2019
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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?

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
help_outline

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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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Expert Answer

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Step 1
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
help_outline

Image Transcriptionclose

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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Step 2
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.
help_outline

Image Transcriptionclose

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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Step 3
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
help_outline

Image Transcriptionclose

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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