Last, after the shift of the supply curve is taken into account, the difference between the initial and after-tax equilibrium can be observed. The growth of market price is determined by the price elasticities of demand and supply. In the case of demand being more elastic than supply, the incidence of the tax falls more heavily on sellers and the consumers feel a smaller growth of price and vice versa. In both cases, the consumers pay more for the good and while the sellers initially receive more money, after the tax is accounted for, they are left with less money than if there were no tax imposed. The tax raises the price which the customers pay for the good (unless the absorb the whole tax cost) and lowers the price the producers are effectively selling the good for unless they pass on the whole tax cost. The difference between the two prices remains the same no matter who bears most of the burden of the tax. Example The original equilibrium price is $3.00 and the equilibrium quantity is 100. The government then levies a tax of $0.50 on the sellers. This leads to a new supply curve which is shifted upward by $0.50 compared to the original supply curve. The new equilibrium price will sit between $3.00 and $3.50 and the equilibrium quantity will decrease. If we say that the consumers pay $3.30 and the new equilibrium quantity is 80, then the producers keep $2.80 and the total tax revenue equals $0.50 x 80 = $40.00. The burden of the tax paid by buyers is $0.30 x 80 = $2.40 and the burden paid by sellers equals $0.20 x 80 = $1.60. Ad valorem tax impact Similarly the effect can be broken down into three steps. First, the tax again affects the sellers. The quantity demanded at a given price remains unchanged and therefore the demand curve stays the same. Since the tax is a certain percentage of the price, with increasing price, the tax grows as well. The supply curve shifts upward but the new supply curve is not parallel to the original one. Second, the tax raises the production cost as with the specific tax but the amount of tax varies with price level. The upward shift of the supply curve is accompanied by a pivot upwards and to the left of the original supply curve. The vertical