Daily Review -- Per Unit Tax

In order to boost consumer spending, the government removes the per-unit tax on Pep UP!  Print off this page and use a marker to show what happens to the market equilibrium for Pep UP!
(Clicking on the Image enlarges it.)


Your answer should show that the supply curve moves to the right.  You should verify that a lower price results and an increase in the quantity demanded for Pep UP!


As a result of the tax removal, the real buying power of the consumer rises so the budget curve moves out and the consumer is elevated to a higher indifference curve and higher utility.  Likewise, the consumers surplus increases.  


Supply and demand problems like these are on my FREE APP available here.