A $10 per-unit tax on game consoles raises the equilibrium price paid by consumers by $5 per console.The quantity sold before the tax was 5,000 per year.The revenue from the tax is

Question

Quizplus · Accepted Answer

The tax raises $10 per unit sold, and since the quantity sold before the tax was 5,000 per year, the maximum revenue could be $50,000 if all units were still sold. However, the question implies that the tax burden is shared (consumers pay $5 more), suggesting a decrease in quantity sold due to the tax, leading to revenue being positive but less than $50,000.

A $10 Per-Unit Tax on Game Consoles Raises the Equilibrium