Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.
-Refer to Figure 8-8.The government collects tax revenue that is the area
A)L.
B)B+D.
C)C+F.
D)F+G+L.

Question

Figure 8-8
Suppose the government imposes a $10 per unit tax on a good. 
-Refer to Figure 8-8.The government collects tax revenue that is the area
A)L. 
B)B+D. 
C)C+F. 
D)F+G+L.

Quizplus · Accepted Answer

The tax revenue collected by the government is the difference between the price paid by buyers and the price received by sellers. In this case, the tax shifts the supply curve to the left, resulting in a new equilibrium price and quantity. The tax revenue is equal to the tax amount ($10) multiplied by the new quantity sold (150 units), which equals $1500. The tax revenue is represented by the area B plus D.

Figure 8-8 Suppose the Government Imposes a $10 Per Unit Tax on Tax