Figure 18-2

Figure 18-2 shows the widget market before and after an excise tax is imposed. The tax per widget equals ____.
A)$5
B)$20
C)$25
D)$30

Question

Figure 18-2

Figure 18-2 shows the widget market before and after an excise tax is imposed. The tax per widget equals ____.
A)$5 
B)$20 
C)$25 
D)$30

Quizplus · Accepted Answer

The tax per widget is calculated by taking the difference between the original equilibrium price (where supply and demand intersect) and the new equilibrium price after the tax is imposed. In this case, the original equilibrium price is $30 and after the tax, the new equilibrium price is $55. So, the tax per widget equals $55 - $30 = $25. Therefore, the correct answer is choice C.

Figure 18-2 Figure 18-2 Shows the Widget Market Before and After an and After