The U.S. government wants to help the American auto industry compete against foreign automakers that sell trucks in the United States. It can do that by imposing an excise tax on each foreign truck imported and sold in the United States. The hypothetical pre-tax and post-tax demand and supply schedules for imported trucks are given in the graph. (2 points each)

a. In the absence of government intervention:

-- What is the equilibrium price of an imported truck? $__________

-- What is the equilibrium quantity of imported trucks? __________ units

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b. Suppose government imposes an excise tax of $15,000 per imported truck on suppliers of imported trucks.

-- How many imported trucks will be demanded after imposition of the tax? __________ units

-- At what price? $________

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c. How much does the foreign automaker *keep* after paying the excise tax to the government? $__________

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d. Calculate the government revenue raised by the excise tax. $_________

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e. Use either the graph and/or values you have correctly obtained to answer the following two questions:

-- What share of the tax do buyers end up paying for each truck $_________.

-- What share of the tax do sellers end up keeping for each truck $________.

ce of imported trucks S Tax S D $0 0 500 Imported trucks