In the market for widgets,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.The equilibrium quantity in the market for widgets is 200 per month when there is no tax.Then a tax of $5 per widget is imposed.As a result,the government is able to raise $750 per month in tax revenue.We can conclude that the post tax quantity of widgets is

Question

Quizplus · Accepted Answer

When a tax of $5 per widget is imposed, the supply curve shifts upward by $5. The new equilibrium price will be where the new supply curve intersects with the original demand curve. Let's call the new equilibrium quantity of widgets Q'. We know that tax revenue equals tax per widget multiplied by the quantity sold with the tax, which is:

Tax Revenue = $5 x Q'

We also know that tax revenue is $750 per month. So, we can set up an equation:

$750 = $5 x Q'

Solving for Q', we get:

Q' = $750 / $5 = 150

Therefore, the post-tax quantity of widgets is 150 per month.

In the Market for Widgets,the Supply Curve Is the Typical