ECONOMICS
Budget Line with Per-Unit Tax on Gasoline
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CASE ANALYSIS
Scenario
A consumer faces a per-unit tax on gasoline, which effectively increases its price and rotates the budget line inward along the gasoline axis, altering the affordable consumption set.
Key decisions
- Model tax as an additive disturbance to base price via sum junction
- Represent budget constraint as a generic block mapping price and income to quantities
- Use external income signal to feed into the constraint block
When to reuse this
When teaching or analyzing how excise taxes distort budget constraints and influence consumer equilibrium.
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blockdiagram-budget-line-with-a-per-unit-tax-on-gasoline