-The table gives the demand and supply schedules for cookies. The government now levies a $0.30 tax on cookies. As a result, the price of a packet of cookies increases by _______ and the tax revenue collected is _______ a week.

Question

Quizplus · Accepted Answer

The tax causes the supply curve to shift upwards by the amount of the tax ($0.30), but due to the elasticity of demand and supply, the actual price increase is often less than the tax itself, leading to a smaller increase in price (e.g., $0.20). The tax revenue collected is the tax per unit ($0.30) multiplied by the quantity sold after the tax is imposed, which can result in a specific amount (e.g., $24) depending on the new equilibrium quantity.

-The Table Gives the Demand and Supply Schedules for Cookies