Asked by Abdul Sattar on Jun 13, 2024
Verified
Refer to Scenario 19.4. How much total tax revenue is raised by the tax?
A) $1
B) $10
C) $16
D) $20
Tax Revenue
Tax Revenue refers to the income that is gained by governments through taxation, which is then used to fund public services and governmental operations.
- Determine the comprehensive burden of a tax, which includes the revenue from the tax as well as the additional burden.
Verified Answer
GF
Ginny FischerJun 18, 2024
Final Answer :
C
Explanation :
To find the total tax revenue, we first need to determine the quantity of widgets sold after the tax is imposed. The new price to consumers is $6, so we can substitute P = 6 into the demand equation to find Q: 6 = 10 - 0.25Q. Solving for Q gives us Q = 16. Since the tax is $1 per unit, and 16 units are sold, the total tax revenue is 16 units * $1/unit = $16.
Learning Objectives
- Determine the comprehensive burden of a tax, which includes the revenue from the tax as well as the additional burden.