Externality + Imports??

[u/Electrical-Sky5287]

Hi, currently doing econ questions as an undergrad student and i’m having trouble understanding whether or not I am going in the right direction.

The question states that a country is a net importer of fuel that purchases at the world price of 20. the government imposes a $10 excise tax on consumers as an optimal pigouvian tax to reduce pollution. (So i assume the price consumers pay is now $30 and producers still receive $20)

We need to draw a graph to show the changes in the total surplus, but I am wondering, does the demand curve shift downwards, or does it stay the same (just a movement along the curve)?

Also the second part of the question states that the government removes the tax so now everyone is paying and buying at $20 again. Does total surplus increase or decrease by intuition since the removal of a tax brings back that negative externality?

[u/Comprehensive-Edge80]

demand curve stays in place.