Refer to the information provided in Figure 5.7 below to answer the question(s) that follow. Figure 5.7
The above figure represents the market for pumpkins both before and after the imposition of an excise tax, which is represented by the shift of the supply curve.
-Refer to Figure 5.7. Had the demand for pumpkins been perfectly inelastic at Point A, the total revenue the government would have received from the imposition of this tax would have been
A) $875.
B) $1,225.
C) $2,100.
D) $3,600.

Question

Refer to the information provided in Figure 5.7 below to answer the question(s) that follow.  Figure 5.7
The above figure represents the market for pumpkins both before and after the imposition of an excise tax, which is represented by the shift of the supply curve.
-Refer to Figure 5.7. Had the demand for pumpkins been perfectly inelastic at Point A, the total revenue the government would have received from the imposition of this tax would have been
A) $875. 
B) $1,225. 
C) $2,100. 
D) $3,600.

Quizplus · Accepted Answer

If demand is perfectly inelastic, quantity demanded does not change with price. Therefore, the total revenue from the tax would be the tax amount multiplied by the original quantity sold, which is the highest possible revenue.

Refer to the Information Provided in Figure 5