2-F AP Microeconomics Government Intervention Price Controls and Taxes (2) - Unit 2 Supply Demand and Consumer Choice 1#4 Excise Taxes Excise Tax = A

# 2-F AP Microeconomics Government Intervention Price Controls and Taxes (2)

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Unit 2: Supply, Demand, and Consumer Choice 1
#4 Excise Taxes Excise Tax = A per unit tax on producers For every unit made, the producer must pay \$ NOT a Lump Sum (one time only)Tax The goal is for them to make less of the goods that the government deems dangerous or unwanted. Ex: Cigarettes “sin tax” Alcohol “sin tax” Tariffs on imported goods Environmentally Unsafe Products Etc. 2
Excise Taxes Q o \$5 4 3 2 1 P 3 Supply Schedule P Qs \$5 140 \$4 120 \$3 100 \$2 80 \$1 60 D S 40 60 80 100 120 140 Government sets a \$2 per unit tax on Cigarettes
Excise Taxes Q o \$5 4 3 2 1 P 4 Supply Schedule P Qs \$5 \$7 140 \$4 \$6 120 \$3 \$5 100 \$2 \$4 80 \$1 \$3 60 D S 40 60 80 100 120 140 Government sets a \$2 per unit tax on Cigarettes
Excise Taxes Q o \$5 4 3 2 1 P 5 Supply Schedule P Qs \$5 \$7 140 \$4 \$6 120 \$3 \$5 100 \$2 \$4 80 \$1 \$3 60 D S 40 60 80 100 120 140 Tax is the vertical distance between supply curves S Tax
Excise Taxes Qo\$54321P6DS40 60 80 100 120 Identify the following: 1.Price before tax2. Price consumers pay after tax3.Price producers get after tax
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