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(Solved): Show how a gasoline tax of 10 cents per gallon collected from sellers affects the market equilibrium ...
Show how a gasoline tax of 10 cents per gallon collected from sellers affects the market equilibrium for gasoline. Assume that the demand curve for gasoline is downward-sloping and that the supply curve is upward-sloping. Show the excess burden of the tax on your diagram. What is the incidence of the tax between buyers and sellers? How would your answer be affected if the tax were collected from buyers instead of sellers?