Consider an excise tax imposed on daily parking charges in the downtown of a small city.Before the imposition of the tax,equilibrium price and quantity are $15 and 100 cars parked.(P = $15,Q = 100).The city government imposes a tax of $3 per car parked per day.Market equilibrium adjusts to P = $16 and Q = 95.How much tax revenue does the city government collect per day?
A)$95
B)$100
C)$285
D)$300
E)$1710

Question

Quizplus · Accepted Answer

The tax revenue collected per day can be calculated as follows:

Tax revenue = tax per unit * quantity after tax

Tax per unit is given as $3 per car parked per day. Quantity after tax is the new equilibrium quantity, which is 95.

Tax revenue = 3 * 95
Tax revenue = $285

Therefore, the answer is (C) $285.

Consider an Excise Tax Imposed on Daily Parking Charges in the Downtown