The accompanying graphs depict the market for bags of potato chips, which is currently at an equilibrium price of $1.67 per bag and an equilibrium quantity of 3.33 million bags. Suppose that, in an atiermpt to lower biood pressure and reduce healtheare costs, the government imposes a $1.00 excise (or commodity) tax on potato chips. Seroll down to anrwer all 6 parts of the question a. Suppose the government levies this tax on manufiaturers for each bag of potato chips they produce. Please shift the curve(s) to illustrate this. b. What is the price paid per bag by consumers ( P c ) after the production tax? c. What is the price received net of tax ( P p ) per bag by producers after the production tax? d. Suppose the government, instead of levying the tax on producers, levies this tax on consumers for each bag of potato chips they purchase. Please shift the curve(s) to illustraic this. e. What is the effective price paid per bag by consumers ( P e ) after the consumption tax? f. What is the price received net of tax ( P p ) by producen after the consumption tax?
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The accompanying graphs depict the market for bags of potato chips- wh.docx
1. The accompanying graphs depict the market for bags of potato chips, which is currently at an
equilibrium price of $1.67 per bag and an equilibrium quantity of 3.33 million bags. Suppose
that, in an atiermpt to lower biood pressure and reduce healtheare costs, the government imposes
a $1.00 excise (or commodity) tax on potato chips. Seroll down to anrwer all 6 parts of the
question a. Suppose the government levies this tax on manufiaturers for each bag of potato chips
they produce. Please shift the curve(s) to illustrate this. b. What is the price paid per bag by
consumers ( P c ) after the production tax? c. What is the price received net of tax ( P p ) per bag
by producers after the production tax? d. Suppose the government, instead of levying the tax on
producers, levies this tax on consumers for each bag of potato chips they purchase. Please shift
the curve(s) to illustraic this. e. What is the effective price paid per bag by consumers ( P e ) after
the consumption tax? f. What is the price received net of tax ( P p ) by producen after the
consumption tax?
