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Suppose that in response to a $3 excise tax being imposed on firms providing car washes, the price of a car wash rises from $13 to $15. How much of the tax is actually paid by consumers?1 point$6$1$2$3

Question

Suppose that in response to a 3excisetaxbeingimposedonfirmsprovidingcarwashes,thepriceofacarwashrisesfrom3 excise tax being imposed on firms providing car washes, the price of a car wash rises from 13 to 15.Howmuchofthetaxisactuallypaidbyconsumers?1point15. How much of the tax is actually paid by consumers?1 point6112$3

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Solution

Before the tax, consumers were paying 13foracarwash.Afterthetaxwasimposed,thepriceroseto13 for a car wash. After the tax was imposed, the price rose to 15. Therefore, consumers are now paying 2morethantheywerebefore.Thismeansthatconsumersarepaying2 more than they were before. This means that consumers are paying 2 of the 3tax.So,theansweris3 tax. So, the answer is 2.

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