Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the government's revenue from the tax A) is larger if the supply curve is S₀. B) is larger if the supply curve is S₁. C) is identical under either supply curve. D) is not maximized.

Question

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 larger quantity sold, thus generating more tax revenue per unit.

Figure 18-2 Figure 18-2 Shows a Demand Curve and Two