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ECONOMICS
Asked by Shahir

Please explain how the vertical distance between the Supply curve and the supply+ tax curve or Supply+ subsidy curve is the tax/subsidy per unit?

If an item costs £1 on its own, and £1.20 with the tax, the difference in prices paid by consumer with and without the tax is £0.20. The vertical distance between the [supply] and [supply + tax] curves simply shows this difference.

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