A $10 per- unit tax on mobile phones raises the equilibrium price paid by consumers by $5. Before
The tax, 5,000 mobile phones were sold per year. The revenue from the tax is

Question

Quizplus · Accepted Answer

The revenue from the tax is calculated as the tax per unit ($10) multiplied by the new quantity sold. Since the question does not specify the new quantity sold after the tax is imposed, we cannot calculate the exact revenue. However, we know it's positive because the tax is collected on each mobile phone sold, but it's less than $50,000 because not all of the tax burden falls on consumers (only $5 of the $10 tax).

A $10 Per- Unit Tax on Mobile Phones Raises the Equilibrium