Price Elasticity

of Supply and
Tax
G10
 Draw supply curve

If the quantity produced is:

- 10 units: the total cost is 20

- 20 units: the total cost is 60

- 30 units: the total cost is 120

- 40 units: the total cost is 160

Calculate
Price • When price increases from 2 to 3
Elasticity of • When price increases from 3 to 4
supply
Indirect tax

The government The government

levies a $5 dollar tax levies a 10% per
per unit: draw the unit: draw the new
new supply curve supply curve
 • To draw the supply curve, first calculate the
Tips total cost and then calculate the cost (price)
per unit