Microeconomics 6th Edition by Robert Hall, Shirley Kuiper, Marc Lieberman

Exercise 7

In Figure 1,a negative externality was corrected with a $1 per gallon tax on gasoline producers. Draw a diagram to show that the total price paid by consumers,the total price received by firms,and the equilibrium quantity would have been exactly the same if the same tax had been imposed on gasoline consumers instead of producers.
Figure 1 A Tax on Producers to Correct a Negative Externality

The negative externality is corrected with a tax on suppliers of $1-equal to the negative externality per unit. The supply curve shifts upward by the amount of the tax,moving the market equilibrium to the efficient point B. Only units valued at least as much as their full cost-the first 320 million units-are produced.