1. 3.3 Excise Taxes Impact of an Excise Tax
Tax on a particular good or service expressed as a dollar amount per unit of quantity
The curve for producers is S, because the price the producers see does not include the tax.
The supply curve facing consumers is S+tax, since they are paying tax on the quantity they are buying

2. Impact of an Excise Tax
An excise tax causes supply as seen by consumers to shift to S1
Initially, consumers see a price of almost $4
At the new equilibrium, consumers pay $2.60 which producers receive $1.00
Since D is elastic, producers pay more tax than consumers

3. Impact of an Excise Tax

4. Impact of an Excise Tax Overall:
If supply is elastic, consumers pay more of the tax
If supply is inelastic, producers pay more of the tax