In 1926, bad weather decreased the potato supply, driving up the price. The higher price decreased the demand, which drove the price down. Price rises to P4. Figure 4 shows the supply and demand curves for bananas. This trick, as explained in the text, lets us graph several different but equivalent taxes on the same figure.
All numbers are approximate.
I would give credit to both those who do and do not include the tax in expenditure, although I would prefer that if they include the tax they make clear the distinction between the two parts of the expenditure. If so, give an example. Consider a tax of a thousand dollars a pound, which lowers consumption, hence expenditure, to zero. It is also on what they get for their money.