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Figure: The Shrimp Market
-(Figure: The Shrimp Market) Look at the figure The Shrimp Market. If the government wants to limit shrimp sales to 250 pounds, it can impose a _____ excise tax on sellers, and the total tax revenue generated will be _____.

Question

Use the following to answer questions:
Figure: The Shrimp Market 
-(Figure: The Shrimp Market) Look at the figure The Shrimp Market. If the government wants to limit shrimp sales to 250 pounds, it can impose a _____ excise tax on sellers, and the total tax revenue generated will be _____.

Quizplus · Accepted Answer

The excise tax needed to limit sales to 250 pounds is $10, as this would shift the supply curve upwards by $10, reducing the equilibrium quantity to 250 pounds. The total tax revenue is calculated as the tax per unit ($10) multiplied by the quantity sold (250 pounds), resulting in $2,500.

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