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ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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
Transcribed Image Text:Suppose the Canadian government has decided to place an
excise tax of $20 per tire on producers of automobile tires.
Excise taxes are also called sales or commodity taxes.
Previously, there was no excise tax on automobile tires. As a
result of the excise tax, producers of tires, such as
Bridgestone and Michelin, are going to alter their tire prices.
The graph illustrates the demand and supply curves for
automobile tires before the excise tax.
Please shift the appropriate curve or curves on the graph to
demonstrate the impact of the new tax.
150
140
130
120
Price
888
110
100
90
Supply
80
00
60
50
°
1
2
3
4
5
Quantity
What is the price consumers pay for a tire post tax? Round to
the nearest 10.
70
288
price paid by consumers: $ 100
Demad
10
6
7
8
9
10
Expert Solution
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