The government is considering levying a tax of $60 per unit on suppliers of either concert tickets or bus passes. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for concert tickets is shown by D
(on the first graph), and the demand for bus passes is shown by D
(on the second graph).
Suppose the government taxes concert tickets. The following graph shows the annual supply and demand for this good. It also shows the supply curve (S+Tax
) shifted up by the amount of the proposed tax ($60 per ticket).
The $50 tax imposed by the government makes the concert tickets more expensive, causing a fall in the demand of tickets to... View the full answer