Figure 8-6
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-6.The amount of the tax on each unit of the good is
A)$6.
B)$8.
C)$10.
D)$12.

Question

Figure 8-6
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-6.The amount of the tax on each unit of the good is
A)$6. 
B)$8. 
C)$10. 
D)$12.

Quizplus · Accepted Answer

The tax represented by the vertical distance between points A and B is $10. This is because the price without the tax (the equilibrium price) is $20, and with the tax, the price paid by buyers increases to $24 while the price received by sellers decreases to $14. The difference between these two prices, which represents the tax, is $10. Therefore, the amount of the tax on each unit of the good is $10.

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