Figure 8-4
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-4.The amount of tax revenue received by the government is equal to

Question

Figure 8-4
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-4.The amount of tax revenue received by the government is equal to

Quizplus · Accepted Answer

The tax revenue received by the government is equal to the area of the rectangle formed by the vertical distance between equilibrium quantity (30) and the quantity demanded with tax (20) and the horizontal distance between the two points (40). The area of the rectangle is 40 x 20 = $800. Since the tax rate is $1 per unit, the total tax revenue received by the government is $800 + $180 (tax on producers) = $980. Therefore, the correct answer is choice C.

Figure 8-4 the Vertical Distance Between Points a and B Represents a Represents