In the diagram above,D represents the original demand curve,S represents the original supply curve,and S' represents the supply curve once a per-unit tax is imposed.
-Refer to the diagram above.After the tax is imposed,the equilibrium quantity is the distance
A) FB.
B) 0B.
C) 0F.
D) 0F + 0B.
E) 0F - FB.

Question

In the diagram above,D represents the original demand curve,S represents the original supply curve,and S' represents the supply curve once a per-unit tax is imposed.
-Refer to the diagram above.After the tax is imposed,the equilibrium quantity is the distance
A) FB. 
B) 0B. 
C) 0F. 
D) 0F + 0B. 
E) 0F - FB.

Quizplus · Accepted Answer

When a per-unit tax is imposed, the supply curve shifts upward by the amount of the tax. This shift causes the equilibrium quantity to decrease from Q1 to Q2 and the equilibrium price paid by buyers to increase from P1 to P2.

In the diagram, the distance 0F represents the original quantity supplied, and the distance 0B represents the original quantity demanded. Since the tax causes the new equilibrium quantity to be lower than the original quantity demanded, the distance 0F must be greater than the distance FB.

Therefore, the correct answer is C) 0F.

In the Diagram Above,D Represents the Original Demand Curve,S Represents