Figure 18-3 -Refer to Figure 18-3.The Figure Above Shows a Demand Curve

question 89

Essay

Figure 18-3

-Refer to Figure 18-3.The figure above shows a demand curve and two supply curves, one more elastic than the other.Use Figure 18-3 to answer the following questions.
a.Suppose the government imposes an excise tax of $1.00 on every unit sold.Use the graph to illustrate the impact of this tax when the supply curve is S₁ and when the supply curve is S₂.
b.If the government imposes an excise tax of $1.00 on every unit sold, will the consumer pay more of the tax if the supply curve is S₁ or S₂? Refer to the graphs in your answer.
c.If an excise tax of $1.00 on every unit sold is imposed, will the revenue collected by the government be greater if the supply curve is S₁ or S₂?
d.If the government imposes an excise tax of $1.00 on every unit sold, will the deadweight loss be greater if the supply curve is S₁ or S₂?

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