00:01
All right, we are doing problem number 30 from chapter 5.
00:03
It is asking in a market where the supply curve is perfectly inelastic, how does an excise tax affect the price paid by consumers and the quantity bought and sold? so let's graph that out, shall we? here's our price, quantity, our normal looking demand curve.
00:21
And for a perfectly inelastic supply, what's that going to look like? well, it's going to be a vertical line.
00:27
So here's our vertical line.
00:28
Then for our tax, we're going to have up here price, like with the tax, and down here, we're going to have the price paid by consumers.
00:41
Here is, you know, we'll say quantity one and quantity two...