Use the following to answer question:
-(Figure: The Market for Music Downloads)Use Figure: The Market for Music Downloads.If the government imposes a tax of $3 in this market,the government will receive tax revenue of:

Question

Use the following to answer question: 
-(Figure: The Market for Music Downloads)Use Figure: The Market for Music Downloads.If the government imposes a tax of $3 in this market,the government will receive tax revenue of:

Quizplus · Accepted Answer

A tax of $3 shifts the supply curve up by $3, reducing the quantity supplied from 120 to 90. At a price of $10, the quantity demanded is 100, so only 90 units will be sold after the tax. The price rises to $13 ($10 + $3) and consumers pay this entire amount. Tax revenue is equal to the tax per unit ($3) multiplied by the quantity sold (90), equal to $270.

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