Economics 200 52021: Prof. Lisa M. George Exercise 4: Taxes & Price Ceilings Name: Problem 4.1. The graph below displays the annual market for automobile tires. The federal government puts a $60 tax per tire on tire buyers. ['S/tire) Supply | (b) The tax reduces trade in tires by million tires per year. 160 140 (c) In the tax equilibrium, sellers receive per 120 tire, which is $ less than without the tax. 100 Circle this price on the vertical axis. 80 Demand 60 (d) In the tax equilibrium, buyers pay $ per 40 tire, which is $ more than without the tax. 20 Circle this tax-inclusive price on the vertical axis. 8 Tires [mil trev/year) (e) The government collects $ per year in rev- (a) Illustrate how this $60 tax affects the demand enue from the tire tax. Illustrate the tax revenue for or supply of tires. Mark the new equilibrium in the graph. point with Et