Use the following to answer questions:
Figure: Demand Tax
-(Figure: Demand Tax) The figure illustrates a market for gasoline with a $1 tax imposed on the buyers. What price do buyers pay for a gallon of gasoline in this market?
A) $3.50
B) $3
C) $2.50
D) between $2.50 and $3.50, depending on the elasticity of supply

Question

Use the following to answer questions:
Figure: Demand Tax 
-(Figure: Demand Tax) The figure illustrates a market for gasoline with a $1 tax imposed on the buyers. What price do buyers pay for a gallon of gasoline in this market?
A) $3.50 
B) $3 
C) $2.50 
D) between $2.50 and $3.50, depending on the elasticity of supply

Quizplus · Accepted Answer

The $1 tax is added to the equilibrium price of $2.50, making the price buyers pay $3.50.

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