Final answer:
The price buyers effectively pay after the imposition of a tax is given by Pc, which reflects the initial equilibrium price plus the tax. The tax incidence on buyers is larger when supply is more elastic because sellers can adjust their supply more easily than consumers can change their demand.
Step-by-step explanation:
When a government imposes a tax on a market with an inelastic supply, such as beachfront hotels, the sellers bear a larger burden of the tax because they have fewer alternatives to continuing their business. In contrast, in a market with an elastic supply, such as the tobacco industry, the tax burden primarily falls on the consumers because sellers can more easily adjust their businesses to avoid supplying the taxed goods. Therefore, to determine the price that buyers effectively pay after a tax is imposed, we look at the price difference between what consumers pay, Pc, and the initial equilibrium price, Pe. The larger the difference due to the tax imposition, the higher the price that consumers are paying effectively, which would be represented by Pc in economic analyses.