C Chegg che 1785472dtcontentnid7598895 2courses18 SUM1 ECON2

C Chegg che 1785472-dt-content-nid-7598895 2/courses/18 SUM1 ECON2302010 jhusein/ASSIG NMENT 19) Use the figure below to answer the following question. Price $13 $11 S9 8 10 What was the price of the product before the tax was imposed, and what is the amount of the excise tax? 19) 20) Use the figure below to answer the following question Price $13

Solution

Q19. Answer is B. $11 and $4. Explanation: Both supply and demand meet at a point $11. Therefore Equilibrium price is $11. After levying tax, producer receive $ 9 and consumer paiud $13. Hence excise tax is $4 (13-9) Q20. Answer is C. $2. Earlier the price is 11. Now consumer need to pay $13. Q21. Answer is B. $9.