Excise taxes are usually the legal responsibility of the supplier. A brewery would be responsible for sending in excise tax payments for each case or keg of beer sold. We expect at least part of the cost of the tax to be passed along to beer drinkers in higher prices. That is, consumers may bear some of the burden of the tax .

    Before we begin our detailed graphical analysis, let's review the meaning of a simple supply curve such as that shown to the right. This supply curve shows that 50 units will be supplied if the market price is $3.00 while a market price of $4.50 would be required to induce the supplier to supply 60 units for sale. What happens if an excise tax is added?

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