ExciseTax Practice- Supply and Demand

The video tutorial explains the impact of excise tax on supply, price, and quantity. It covers key questions about tax per unit, total tax revenue, consumer spending, and net revenue for producers. The tutorial also discusses how the tax burden is shared between consumers and producers, using supply curves to illustrate these concepts.

What happens to the supply curve when an excise tax is introduced?

• It becomes vertical.

• It remains unchanged.

• It shifts to the left.

• It shifts to the right.

How is the tax per unit determined from the supply curves?

• By the horizontal distance between the curves.

• By the vertical distance between the curves.

• By the slope of the demand curve.

• By the intersection of supply and demand.

What is the total tax revenue if the tax per unit is $4 and the quantity is 10?

• $10

• $20

• $40

• $80

How much do consumers spend if they buy 10 units at $12 each?

• $120

• $100

• $110

• $130

How is the tax burden shared between consumers and producers?

• Consumers pay all of it.

• Producers pay all of it.

• Both share it equally.

• It depends on the elasticity of demand.