Price
(dollars)
6.25
5.00
4.00
Quantity of
Good X
Refer to Exhibit 20-2. The market for good X is initially in equilibrium at $5. The government
then places a per-unit tax on good X, as shown by the shift of S₁ to S2. As a result, the
equilibrium price
rises from $5.00 to $6.25.
falls from $5.00 to $4.00.
remains constant at $5.00.
none of the above
