Assume a market for gasoline.  The market (equilibrium) price is $1.00 and the market Q is 100 gallons per day.  Draw this graph.  Draw the demand and supply curves with a typical slope (not too inelastic or elastic).  Then assume that an excise tax is levied on gasoline.  The per unit tax is 50 cents per gallon.  Show what will happen on your graph when the tax is levied.  Shift the supply curve by the amount of the per unit tax.  Assume the new price to the consumer of gasoline is $1.30 per gallon and the new Q is 80 gallons per day.  Answer the following questions:
 
 
 
 
 
 
 

What is the total tax revenue the government will collect?
How much of the tax revenue is paid by consumers?
By producers?

Now, draw the same graph as before except with a perfectly inelastic demand curve.  Then answer the same three questions:
 
 
 
 
 
 
 
 
 
 
 

What is the total tax revenue?
How much of the tax revenue is paid by consumers?
By producers?