When the government imposes a commodity tax group of answer...

Name: when the government imposes a commodity tax group of answer choices buyers will pay a higher price inclusive of the tax and sellers will receive a lower price exclusive of the tax buyers wil 10402
Uploaded: 2022-07-11T22:43:47-08:00
Duration: 2 min 14 s
Channel: Andrew Davis
Description: when the government imposes a commodity tax group of answer choices buyers will pay a higher price inclusive of the tax and sellers will receive a lower price exclusive of the tax buyers wil 10402

When the government imposes a commodity tax, Group of answer choices buyers will pay a higher price inclusive of the tax and sellers will receive a lower price exclusive of the tax buyers will pay a lower price inclusive of the tax and sellers will receive a higher price exclusive of the tax

Transcript

00:01 So here we have an analysis of a tax.

00:03 And to analyze the tax, let's sketch the market.

00:05 So i've drawn a market with a demand and supply curve, and we're told that the tax is imposed on the sellers of the good.

00:12 That is going to shift up the supply curve, right? the tax reflects that sellers need a higher price because they have to pay the tax, right? this difference here, that gap between the two lines is the amount of the tax, right? sellers need more.

00:32 If you were going to sell it for $100 before and the government imposes a $20 tax and you every time you sell, you'd only be getting $80.

00:40 To get your $100 after you sell it and pay the tax, now you need to charge $120 up front.

00:47 So the curve shifts up by the amount of the attacks.

00:50 That creates a new equilibrium at a higher price and a lower quantity, right? we can see that compared to the old equilibrium, the quantity is decreasing and the prices increasing, right? so sellers now are charging this price.

01:12 This is the price paid up here, but sellers only receive this lower price because the difference here is the tax.

01:21 Right? if this is 120, the receive will only be 100.

01:25 And that difference is the $20 tax.

01:28 So now let's look at the options.

01:30 One, raise both the price buyers buy and the effective price sellers receive...

Question

When the government imposes a commodity tax, Group of answer choices buyers will pay a higher price inclusive of the tax and sellers will receive a lower price exclusive of the tax buyers will pay a lower price inclusive of the tax and sellers will receive a higher price exclusive of the tax

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