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The questions from your image focus on understanding the effect of an excise tax on gasoline within a supply-and-demand framework.

### 1. Supply-and-Demand Diagram Without the Tax:
In the first part, you are asked to draw a supply-and-demand diagram without the excise tax. Here's what to include:
- **Price paid by consumers (P*)**: This is the equilibrium price where the demand and supply curves intersect.
- **Price received by producers (P*)**: Without any tax, this is the same as the price paid by consumers (P*).
- **Quantity of gasoline sold (Q*)**: This is the equilibrium quantity where demand equals supply.

### 2. Supply-and-Demand Diagram With the $1 per Gallon Excise Tax:
Now, with a $1 per gallon excise tax, several changes happen to the market:
- **Price paid by consumers (P\*$Gross$)**: This is the new price consumers pay, which is higher than P* due to the tax.
- **Price received by producers (P\*$Net$)**: This is the price producers receive after the tax is subtracted. It is lower than P*.
- **Quantity of gasoline sold (Q\*$w/Tax$)**: The quantity sold will decrease compared to Q* because the tax discourages some transactions.
- **Tax Revenue**: This is calculated as the tax per unit ($1) times the new quantity sold with the tax (Q\*$w/Tax$).

### How the Graph Changes With the Tax:
1. The **supply curve** shifts vertically upward by $1 due to the tax.
2. The price consumers pay increases, while the price producers receive decreases by the same amount.
3. The equilibrium quantity falls due to the tax-induced price difference between what consumers pay and what producers receive.

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### Related Questions:
1. How does an excise tax affect consumer and producer surplus?
2. What are deadweight losses, and how does the tax create one?
3. How can the tax burden be shared between consumers and producers?
4. What happens if the demand for gasoline is perfectly inelastic?
5. How would the market adjust if the excise tax were increased to $2 per gallon?

### Tip:
The steeper the demand curve, the larger the tax burden on consumers, while the steeper the supply curve, the larger the burden on producers.

Suppose the U.S. government imposes a $1 per gallon excise tax on gasoline. Draw a supply-and-demand diagram of the market for gasoline without the tax, and another with the $1 per gallon excise tax, showing the price paid by consumers, price received by producers, and quantity of gasoline sold.

Understand how a $1 per gallon excise tax affects the supply-and-demand equilibrium in the gasoline market. Learn how to draw the supply-and-demand diagram before and after the tax, showing changes in consumer prices, producer revenues, and tax revenue.

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