pump price

pump price

Suppose the price of gasoline that drivers pay at the pump is $4 and stations pay a tax of $1 to the government and keep $3. Draw a diagram to show this. Then there is a tax switch: The tax on stations is ended, and drivers are required to keep receipts and pay the government a $1 tax for each gallon they consume. On the same diagram, show what happens to the pump price. What is the impact of the switch on drivers? On stations?

pump price