The accompanying diagram shows the effect of levying an income tax on the consumer.The pre-tax optimum is at point A,and the post-tax optimum is at point B. To measure the amount of tax money collected by the government,one uses the vertical distance between points
A) A and B.
B) A and D.
C) B and C.
D) B and D.

Question

The accompanying diagram shows the effect of levying an income tax on the consumer.The pre-tax optimum is at point A,and the post-tax optimum is at point B.  To measure the amount of tax money collected by the government,one uses the vertical distance between points
A) A and B. 
B) A and D. 
C) B and C. 
D) B and D.

Quizplus · Accepted Answer

The vertical distance between points B and C represents the amount of tax revenue collected by the government. This is because it represents the difference between the post-tax price paid by the consumer (point B) and the pre-tax price received by the producer (point C). Therefore, the correct answer is C.

The Accompanying Diagram Shows the Effect of Levying an Income