Alright, let's try this example. The following graph depicts the market for a bag of magic beans. If the government imposes a tax of 1 cow on buyers of magic beans, what is the tax incidence on producers of magic beans? Alright, so let's go ahead and look at our graph here real quick. So we've got our price, which is in cows and our quantity over here, right? And we've got a supply and demand curve, and then we're going to have a shift in the demand curve because there's a tax on the buyers, right? When the tax is on the buyers, the demand curve is gonna shift and this one's our original demand curve because that's where we have this one price, right? Where we have this cross and this equilibrium going on right here. So right there was our original equilibrium at 2.5, right? So man, this must be some sort of dystopian future Jack and the Beanstalk where first of all, there's been a lot of inflation, right? Jack was able to get his bag of magic beans for just one cow and now we're talking about an equilibrium of 2.5 cows, so we're dealing in half cows. Man, this society's gotten pretty weird. So anyway, at this 2.5 price, that was our original q star, right. So let's go ahead and see what happens after this tax is imposed. So the tax is on the buyer and we're gonna shift the demand curve just like they have here and this is gonna be d₂, right. That was d₁, this is d₂ or d with the tax, right. So it's asking us what is the tax incidence on producers, right? The tax incidence is the share of the tax that that party is gonna pay. In this case, the producers. So what is the share of the tax to the producers? We know that the total tax was 1, right? There was 1 cow that was being the additional tax here. So it's pretty easy to find it and it's only this area here is representing the tax, right? Between the 1.9 and the 2.9. So how do we gauge what is the amount paid by producers? Well, we know that up here, this 2.9, that's the price the buyers are going to pay, right? They're going to pay this price, P_B and the sellers are gonna receive 1.9, right? Because of that 1 cow tax. So, if the original equilibrium was at 2.5, right? So sellers were originally receiving 2.5 cows per bag, now they're only receiving 1.9 cows per bag. So what's the difference? 2.5 cows they were originally receiving minus 1.9, they're paying 0.6 cows of this tax. Right? They're taking 0.6 out of the one, and we can turn this into a percentage pretty quick, right? 0.6 divided by the total tax, which was 1 and that's gonna give us 0.6, right? So that as a decimal is 60%. So 60% of the cow tax is being paid by producers in this case and you can see the other 40%, right the 2.9 minus the 2.5, that's being paid by the consumers in this market. Alright, the tax incidence on producers is gonna be 60% or 0.6 cows. Alright, let's go ahead to the next video.