Consider an excise tax imposed on daily parking charges in the downtown of a small city.Before the imposition of the tax,equilibrium price and quantity are $15 and 100 cars parked.(P = $15,Q = 100).The city government imposes a tax of $3 per car parked per day.Market equilibrium adjusts to P = $16 and Q = 95.What is the total after-tax revenue received per day by the seller after imposition of the tax?

Question

Quizplus · Accepted Answer

The total after-tax revenue received per day by the seller after imposition of the tax is equal to the price per car parked multiplied by the quantity of cars parked. In this case, the price per car parked is $16 and the quantity of cars parked is 95. Therefore, the total after-tax revenue received per day by the seller is $16 x 95 = $1520.

Consider an Excise Tax Imposed on Daily Parking Charges in the Downtown