Final answer:
The final price of a chocolate bar after tax depends on the tax amount per unit and the market's elasticity. The tax burden can fall on either sellers or consumers, which dictates the final consumer price and the tax incidence on sellers. The elasticity of supply and demand influence the tax revenue generated and who pays most of the tax.
Step-by-step explanation:
The price of a chocolate bar after a tax is imposed depends on the initial equilibrium price, the amount of tax per chocolate bar, and how the tax burden is shared between consumers and sellers. Tax revenue is represented by the shaded area, which can be calculated by multiplying the tax per unit by the total quantity sold (Qt).
The extent to which the tax is paid by consumers (tax incidence on the consumers) is shown by the difference between the price consumers pay (Pc) and the initial equilibrium price (Pe). Likewise, the tax incidence on sellers is evidenced by the difference between the initial equilibrium price and the price sellers receive post-tax imposition (Pp).
Depending on the elasticity of supply and demand, the tax burden can disproportionately fall on either sellers or consumers. For example, if supply is more elastic than demand, consumers will bear a larger portion of the tax, resulting in a significantly higher price they pay compared to the initial equilibrium price.
Conversely, if demand is more elastic, consumers might reduce their quantity purchased to avoid higher prices, leading to lower tax revenue. Therefore, who pays the tax and the final price after the tax largely depends on the market's elasticity characteristics.