Refer to the above graph. Assume the market for this product is in equilibrium at the intersection of D2 and S1. The shift in supply from S1 to S2 is due to an excise tax imposed on the product. The incidence of the tax is:
a. $1 from the buyers and $3 from the sellers
b. $3 from the buyers and $3 from the sellers
c. $1 from the buyers and $1 from the sellers
d. $4 from the buyers and $0 from the sellers
Answer: a. $1 from the buyers and $3 from the sellers
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