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Taxes and Efficiency Suppose the government is thinking about levying a per-unit tax of $80 on firms supplying either gaming consoles or internet routers. The
Taxes and Efficiency Suppose the government is thinking about levying a per-unit tax of $80 on firms supplying either gaming consoles or internet routers. The supply curves for both of the two goods are identical, as given by the following graphs. The demand for gaming consoles is given by DC (on the first graph), and the demand for internet routers is given by DR (on the second graph). Suppose the government decides to tax gaming consoles. The following graph plots the yearly demand and supply for this good. It also plots another supply curve (S+Tax ) shifted upward by the proposed tax amount ($80 per console)
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