A $.50 tax on lemons currently generates $200 in revenues per day.If the tax were increased to $2,the revenues generated would drop to $70.This tells you that in this range of tax rates:

Question

Quizplus · Accepted Answer

The increase in tax rate leads to a decrease in total revenue, indicating that the reduction in quantity sold (quantity effect) due to the higher price outweighs the increase in revenue per unit (price effect).

A $50 Tax on Lemons Currently Generates $200 in Revenues Per