Figure 8-4
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-4. The price that buyers effectively pay after the tax is imposed is
A) $12.
B) between $8 and $12.
C) between $5 and $8.
D) $5.

Question

Figure 8-4
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-4. The price that buyers effectively pay after the tax is imposed is
A) $12. 
B) between $8 and $12. 
C) between $5 and $8. 
D) $5.

Quizplus · Accepted Answer

The price that buyers effectively pay after the tax is imposed is $12. This is because the tax is a per-unit tax, and the buyers will pay the price of the good plus the amount of the tax. In this case, the price of the good is $8, and the tax is $4, so the buyers will pay a total of $12.

Figure 8-4 the Vertical Distance Between Points a and B Represents a Represents