Figure 8-6
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-6. When the tax is imposed in this market, the price sellers effectively receive is
A) $4.
B) $6.
C) $10.
D) $16.

Question

Figure 8-6
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-6. When the tax is imposed in this market, the price sellers effectively receive is
A) $4. 
B) $6. 
C) $10. 
D) $16.

Quizplus · Accepted Answer

When a tax is imposed on a market, the price paid by buyers increases while the price received by sellers decreases. In this case, the tax causes the vertical distance between points A and B. This means that the price paid by buyers increases by the amount of the tax, while the price received by sellers decreases by the amount of the tax. 
Before the tax, the equilibrium price was $10. After the tax, buyers pay the new price of $16 and sellers receive the new price of $6. Therefore, the price that sellers effectively receive is $6. Choice B is the correct answer.

Figure 8-6 the Vertical Distance Between Points a and B Represents a Represents