Figure 16.2 Figure 16.2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 16.2.If the government imposes an excise tax of $1.00 on every unit sold, the government's revenue from the tax

Question

Figure 16.2  Figure 16.2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 16.2.If the government imposes an excise tax of $1.00 on every unit sold, the government's revenue from the tax

Quizplus · Accepted Answer

The government's revenue from the tax is larger if the supply curve is S1 because a more elastic supply curve (S1) results in a higher quantity sold, thus generating more tax revenue per unit.

Figure 162 Figure 16