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A-Level Economics · Indirect tax diagram question

Which point on the price axis is the price PRODUCERS receive per unit, AFTER handing the tax to the government?

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The diagram

The answer

Point C. Consumers hand over £7, the government takes £4, producers keep £3 (point C) — read off the ORIGINAL supply curve at point F. Producers receive the consumer price MINUS the tax: £7 − £4 = £3 (point C) — found on the original S at the new quantity, point F. The two-prices habit: after any tax or subsidy, always find BOTH prices.

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This is one of 9 questions on the indirect tax diagram — every corner lettered, every wrong answer diagnosed.

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