Figure 8-4
The vertical distance between points A and B represents a tax in the market.

-Refer to Figure 8-4.The amount of tax revenue received by the government is equal to
A) $350.
B) $490.
C) $700.
D) $840.

Question

Figure 8-4
The vertical distance between points A and B represents a tax in the market.
 
-Refer to Figure 8-4.The amount of tax revenue received by the government is equal to
A) $350. 
B) $490. 
C) $700. 
D) $840.

Quizplus · Accepted Answer

The tax revenue is equal to the area of the rectangle formed by the distance between the supply curve and the original equilibrium quantity (Q1) and the distance between the demand curve and the new equilibrium quantity (Q2). This area is equal to $490 in the given graph.

Figure 8-4 the Vertical Distance Between Points a and B Represents a Represents