Figure 10-6

-Refer to Figure 10-6. If the government imposed a corrective tax that successfully moved the market from the market equilibrium to the social optimum, then tax revenue for the government would amount to

Question

Figure 10-6
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-Refer to Figure 10-6. If the government imposed a corrective tax that successfully moved the market from the market equilibrium to the social optimum, then tax revenue for the government would amount to

Quizplus · Accepted Answer

The tax revenue for the government is calculated by multiplying the quantity of goods sold at the social optimum by the per unit tax. The per unit tax is the vertical distance between the supply and demand curves at the social optimum quantity. The graph or figure is not provided, but based on the correct answer, we can infer that the tax revenue calculated (assuming a standard supply and demand model where a corrective tax shifts the supply curve upwards to account for external costs) matches option C, $2,000. This suggests that the tax per unit multiplied by the quantity sold at the social optimum equals $2,000.

Figure 10-6 ​

Figure 10-6