Question
economics
Assume that the Canadian government has decided to place an excise (or sales) tax of $20 per tire on producers of automobile tires (there is currently no excise tax in Canada on automobile tires). As a result of the excise tax, producers of tires, such as Bridgestone and Michelin, are going to alter their tire prices. The graph illustrates the demand and supply curves for automobile tires before the excise tax. Please shift the appropriate curve(s) on the graph to demonstrate the new equilibrium. What is the price consumers pay for a tire post tax? (Round to the nearest 10). What is the price producers receive for a tire post tax? (Round to the nearest 10).
Explanation / Answer
1, Supply shift to the right, the lowest price to 80.
2, 100
3, 80
