Final answer:
The question is about the effect of an excise tax on the market equilibrium for potato chips, requiring an understanding of economic principles and demand-supply analysis. A similar process is involved in drawing demand and supply models to illustrate market changes due to external factors such as taxes or changes in production costs.
Step-by-step explanation:
The question pertains to the impact of government intervention in the form of an excise tax on the market equilibrium for a product. Specifically, it involves analyzing the market for potato chips before and after the imposition of a $1.00 tax per bag. To address the question, one would need to use economic principles and graphical analysis of demand and supply curves. It is similar to an exercise where you have to draw a demand and supply model to illustrate the market for another product, such as salmon, and determine the new equilibrium after changes in market conditions.
For the potato chips market, after the $1.00 excise tax, the supply curve would shift upwards by the amount of the tax because the cost of production effectively increases. This would result in the new equilibrium price being higher and the equilibrium quantity being lower than before the tax was imposed. It is important to note that the actual burden of the tax is shared between consumers and producers, depending on the relative elasticities of demand and supply.