Consider the market to be in equilibrium with demand curve D and supply curve S.
-Refer to the diagram above.Suppose that a $1 per-unit tax is imposed on sellers.The total tax revenue raised is
A) $7.
B) $5.60.
C) $4.80.
D) $2.80.
E) $1.

Question

Consider the market to be in equilibrium with demand curve D and supply curve S.
-Refer to the diagram above.Suppose that a $1 per-unit tax is imposed on sellers.The total tax revenue raised is
A) $7. 
B) $5.60. 
C) $4.80. 
D) $2.80. 
E) $1.

Quizplus · Accepted Answer

The tax revenue is equal to the area of the triangle formed by the tax wedge, which is 1/2 * base * height = 1/2 * 4 * 1 = $2. The total tax revenue is $2.

Consider the Market to Be in Equilibrium with Demand Curve