Demand and Supply for Gasoline Price Quantity Demanded (in gallons) Quantity Supplied (in gallons) 1 1200 200 2 1150 350 3 1100 500 4 1050 650 5 1000 800 6 950 950 7 900 1100 8 850 1250 9 800 1400 10 750 1550 11 700 1700 12 650 1850 13 600 2000 Assume that the government imposes a $8/gallon tax on gasoline collected from buyers. After the imposition of the tax, what is the price of gasoline? a. $5 b. $10 c. $9 d. $4 e. $7 f. $8
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To do this, we need to subtract the tax amount from the original quantity demanded and supplied. For example, at a price of $1 (before the tax), the quantity demanded is 1200 gallons. After the tax, the quantity demanded would be 1200 - 8 = 1192 gallons. Using Show more…
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