Draw a graph illustrating the equilibrium

Reference no: EM131248419

The table in Application 10.1 indicates that revenues from gasoline taxes will increase by about $14 billion (from $56 billion to about $69 billion per year) if the gasoline tax is raised from $0.40 to $0.50 per gallon. Using the supply and demand curves in Application 10.1, show that the equilibrium quantity, price consumers pay, price producers receive, and tax receipts are as indicated in the table when the tax is $0.50 per gallon. Draw a graph illustrating the equilibrium when the tax is $0.50 per gallon.

Reference no: EM131248419

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