Figure 8-3
The vertical distance between points A and C represents a tax in the market.
-Refer to Figure 8-3.The amount of the tax on each unit of the good is
A)P3 - P1.
B)P3 - P2.
C)P2 - P1.
D)P4 - P3.

Question

Figure 8-3
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-3.The amount of the tax on each unit of the good is
A)P3 - P1. 
B)P3 - P2. 
C)P2 - P1. 
D)P4 - P3.

Quizplus · Accepted Answer

The tax is the vertical distance between the supply curve and the demand curve at the equilibrium quantity. In this case, the tax is P3 - P1.

Figure 8-3 the Vertical Distance Between Points a and C Represents a Represents