Final answer:
To illustrate and quantify the effects of a per unit tax on a market, we can use a supply and demand diagram. The tax shifts the supply curve to the left, resulting in a new equilibrium price and quantity. In this case, a tax of $6 leads to a new equilibrium price of $2.60 and a new quantity of 544.
Step-by-step explanation:
To illustrate and quantify how prices and quantities are affected by the tax, we can use a supply and demand diagram. Start by graphing the demand curve D, which is given as D = 24 - p. Then graph the supply curve S, given as S = 2p - 6. These two curves intersect at the equilibrium point E, with a price of $1.40 and a quantity of 600.
To account for the tax, we need to shift the supply curve to the left by the amount of the tax. The new supply curve intercepts the demand curve at a new quantity identified as Qt. The new market price, Pc, is the price paid by consumers, while sellers receive only Pp per unit sold. The difference between Pc and Pp represents the tax rate. Calculate the new equilibrium price and quantity to determine the effects of the tax.
The introduction of a per unit tax of $6 results in a new equilibrium price of $2.60 and a new quantity of 544. This tax causes a decrease in quantity and an increase in price compared to the original equilibrium.