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 placed on this good,the quantity sold
A)is 600,and buyers effectively pay $10.
B)is 300,and buyers effectively pay $10.
C)is 600,and buyers effectively pay $16.
D)is 300,and buyers effectively pay $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 placed on this good,the quantity sold
A)is 600,and buyers effectively pay $10. 
B)is 300,and buyers effectively pay $10. 
C)is 600,and buyers effectively pay $16. 
D)is 300,and buyers effectively pay $16.

Quizplus · Accepted Answer

The tax causes the supply curve to shift upward by the amount of the tax, which is represented by the vertical distance between points A and B. This results in a new equilibrium quantity of 300 and a new equilibrium price of $16 (where the new supply curve intersects the original demand curve). Buyers effectively pay the amount of the tax ($6) in addition to the market price, so the price they pay is $16 and sellers receive $10. Therefore, the quantity sold is 300 and buyers effectively pay $16.

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