Consider an excise tax imposed on daily parking charges in the downtown of a small city.Before the imposition of the tax,equilibrium price and quantity are $15 and 100 cars parked.(P = $15,Q = 100).The city government imposes a tax of $3 per car parked per day.Market equilbirium adjusts to P = $16 and Q = 95.After imposition of the tax,what is the daily after- tax price received by the seller per car parked?
A)$15
B)$1
C)$16
D)$3
E)$13

Question

Quizplus · Accepted Answer

Before the tax imposition, buyers were paying $15 for each car parked, which was the price received by the seller. After the tax imposition, the equilibrium price is $16, but this is the price paid by buyers. Thus, the price received by the seller after the tax is $13, which is $3 less than before the tax. Therefore, the correct answer is E.

Consider an Excise Tax Imposed on Daily Parking Charges in the Downtown