Figure 8-5
Suppose that the government imposes a tax of P3 - P1.
-Refer to Figure 8-5.The benefit to the government is measured by
A)tax revenue and is represented by area A+B.
B)tax revenue and is represented by area B+D.
C)the net gain in total surplus and is represented by area B+D.
D)the net gain in total surplus and is represented by area C+H.

Question

Figure 8-5
Suppose that the government imposes a tax of P3 - P1. 
-Refer to Figure 8-5.The benefit to the government is measured by
A)tax revenue and is represented by area A+B. 
B)tax revenue and is represented by area B+D. 
C)the net gain in total surplus and is represented by area B+D. 
D)the net gain in total surplus and is represented by area C+H.

Quizplus · Accepted Answer

The benefit to the government is measured by tax revenue, which is the difference between the price with tax (P3) and the price without tax (P1), multiplied by the quantity sold (Q2-Q1). This is represented by area B+D.

Figure 8-5 Suppose That the Government Imposes a Tax of P3 -