00:01
So the way i recommend solving this problem is to sketch a graph, right? let's try to visualize what's happening.
00:05
So we have a market, which is quantity and price.
00:08
I'm going to assume we have some supply curve.
00:10
We have some demand curve, right? before the tax, we observe that the quantity is 15.
00:17
And we also observe that the price is 10.
00:20
Now we have a tax on consumers.
00:23
So after the tax, right, and the tax shifts the demand down, people are not willing to pay as much for the product if they also have to pay for the tax.
00:32
So our new equilibrium is here, and i did not quite the scale, but this is eight, and the consumers pay 12.
00:40
So the consumer price inclusive of the tax is 12, whereas the producers are reading seven.
00:46
So the first thing we can tell is that the tax is equal to five, right? that's the difference between what consumers pay and producers receive.
00:58
Right.
00:58
So that is always price paid minus received...