Figure 8-6
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-6.When the tax is imposed in this market,buyers effectively pay what amount of the $10 tax?
A)$0
B)$4
C)$6
D)$10

Question

Figure 8-6
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-6.When the tax is imposed in this market,buyers effectively pay what amount of the $10 tax?
A)$0 
B)$4 
C)$6 
D)$10

Quizplus · Accepted Answer

When a tax is imposed in the market, the new equilibrium price for buyers will be P2, which is higher than the original equilibrium price P1. The difference between P1 and P2 represents the amount of the tax that buyers are effectively paying. In this case, the difference between P1 and P2 is $6, so buyers are effectively paying $6 of the $10 tax. Therefore, the correct answer is C) $6.

Figure 8-6 the Vertical Distance Between Points a and B Represents a Represents