This post addresses a five-cent tax on gasoline.

Suppose that the gasoline retailing industry is perfectly

competitive, constant cost, and in long run equilibrium. If the government

unexpectedly levies a five-cent tax on every gallon sold by gasoline retailers,

depict what will the effects of the tax be in the short run on industry out

puts and price? Will the price rise by the full five cents in the short run? In

the long run? How would your answer change if the industry was increasing cost?

This post addresses a five-cent tax on gasoline.

Suppose that the gasoline retailing industry is perfectly

competitive, constant cost, and in long run equilibrium. If the government

unexpectedly levies a five-cent tax on every gallon sold by gasoline retailers,

depict what will the effects of the tax be in the short run on industry out

puts and price? Will the price rise by the full five cents in the short run? In

the long run? How would your answer change if the industry was increasing cost?

This post addresses a five-cent tax on gasoline.

Suppose that the gasoline retailing industry is perfectly

competitive, constant cost, and in long run equilibrium. If the government

unexpectedly levies a five-cent tax on every gallon sold by gasoline retailers,

depict what will the effects of the tax be in the short run on industry out

puts and price? Will the price rise by the full five cents in the short run? In

the long run? How would your answer change if the industry was increasing cost?

Suppose that the gasoline retailing industry is perfectly

competitive, constant cost, and in long run equilibrium. If the government

unexpectedly levies a five-cent tax on every gallon sold by gasoline retailers,

depict what will the effects of the tax be in the short run on industry out

puts and price? Will the price rise by the full five cents in the short run? In

the long run? How would your answer change if the industry was increasing cost?