Final answer:
The imposition of a per-unit tax shifts the supply curve upwards, causing a wedge between the price paid by consumers and received by producers, leading to tax revenue and deadweight loss.
Step-by-step explanation:
When a per-unit tax is introduced into a market, the supply curve shifts upwards by the amount of the tax. The tax creates a wedge between the price consumers pay (Pc) and the price producers receive (Pp). In markets where the supply is inelastic and demand is elastic, like beachfront hotels, the tax burden falls disproportionately on the sellers. The tax revenue, represented by the shaded area on a graph, is obtained by multiplying the tax per unit by the quantity sold (Qt). A deadweight loss arises from the reduction in trade due to the tax, and this is shown as the black triangle area on the graph. When both the demand and supply are elastic, applying a per-unit tax tends to generate lower revenue, as it leads to significant reductions in the quantity bought and sold.