Scenario 12-1
Skip places a $20 value on a bottle of wine, and Walt places a $17 value on it. The equilibrium price for a bottle of wine is $15.
-Refer to Scenario 12-1.Suppose the government levies a tax of $3 on each bottle of wine,and the equilibrium price of a bottle of wine increases to $18.How much tax revenue is collected?
A) $0
B) $2
C) $3
D) $6

Question

Quizplus · Accepted Answer

The tax revenue collected is calculated by multiplying the tax per unit ($3) by the quantity sold at the new equilibrium price ($18 - $15 = 3). 
Tax revenue = $3 x 3 = $9 
However, since the tax is $3 per bottle, and the difference between the original equilibrium price and the new equilibrium price is also $3, the tax is borne entirely by the consumers. Therefore, there is no tax revenue collected by the government. Hence, the correct answer is C.

Scenario 12-1 Skip Places a $20 Value on a Bottle of Wine