Suppose the equilibrium quantity in the market for widgets is 200 per month when there is no tax.Then a tax of $5 per widget is imposed.As a result,the government is able to raise $750 per month in tax revenue.We can conclude that the equilibrium quantity of widgets has fallen by
A)25 per month.
B)50 per month.
C)75 per month.
D)100 per month.

Question

Quizplus · Accepted Answer

The tax revenue is $750, which means 150 widgets are sold after the tax ($750/$5). The original equilibrium quantity was 200, so the quantity has fallen by 50 (200 - 150).

Suppose the Equilibrium Quantity in the Market for Widgets Is