The Solved Problem contains the statement: "Of course, the government actually collects the tax from sellers rather than from consumers, but we get the same result whether the government imposes a tax on the buyers of a good or on the sellers." Consider the graph at right showing the gasoline market. When you drive a car you generate several negative externalities such as: creating air pollution, increasing the chance of auto accidents, and creating congestion which wastes other drivers' time. Assume the government decides to address these negative externalities by levying a tax on gasoline production to be paid by gasoline sellers. 1.) Use the line drawing tool to show the new supply curve if a tax on gasoline is imposed on sellers. 2.) Use the point drawing tool to label the new equilibrium. Carefully follow the instructions above, and only draw the required objects. The new equilibrium quantity is ▼ than the initial market equilibrium quantity.

It has been assumed that law enforcement agency decided to address the negative externailities by levying or imposing the tax on the gasoline to be paid the gasoline seller.

A) The supply curve will shift leftward.

The supply curve and the demand curve must be kept in mind and the tax, price level, the quantity of goods that have a demand and the corresponding supply of level.

B) The new equilibrium will achieve the corresponding to the lower quantity level.