### Educational Content on Tax Revenue and Market Equilibrium#### Explanation of the DiagramThe diagram illustrates the supply and demand curves in a market. The vertical axis represents the price, ranging from 0 to 12, while the horizontal axis indicates the quantity, ranging from 0 to 6.- **Supply Curve:** The upward-sloping line labeled "Supply" shows the relationship between price and quantity supplied. As price increases, the quantity supplied also increases. - **Demand Curve:** The downward-sloping line labeled "Demand" reflects the relationship between price and quantity demanded. As price decreases, the quantity demanded increases.#### Points of Interest- **Point A:** This is located on the supply curve at a price of 9 and a quantity of 2.- **Point B:** This is found on the demand curve at a price of 7 and the same quantity of 2.The vertical distance between points A and B symbolizes a tax imposed in the market, which is the reason for the difference in price between the supply and demand curves at a quantity of 2.#### Calculation of Tax RevenueThe tax per unit is the difference in price between points A and B, which is 9 - 7 = 2 (dollars per unit). At a quantity of 2 units, the total tax revenue is calculated by multiplying the tax per unit by the quantity: \[ \text{Tax Revenue} = 2 \text{ (tax per unit)} \times 2 \text{ (quantity)} = 4 \text{ dollars} \]#### Question and Options**Refer to Figure 8-2.** The amount of tax revenue received by the government is:- a. $2.50- b. $9- c. $4- d. $5The correct answer is **c. $4**.This content is designed to help students understand the effect of taxes on market equilibrium, and how to calculate tax revenue using supply and demand curves.

The government sets a maximum and minimum price for products in the market. The regulation of these…

Question Completion Status: THC Vertical distance between points A anu D represents a tax in the market. PRICE 216987 11 10 5 4 3 32w 2 1 B Supply Demand HH 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6 QUANTITY Refer to Figure 8-2. The amount of tax revenue received by the government is a. $2.50. b. $9. C. $4. d. $5. Moving to another question will save this response. M

Question Completion Status: THC Vertical distance between points A anu D represents a tax in the market. PRICE 216987 11 10 5 4 3 32w 2 1 B Supply Demand HH 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6 QUANTITY Refer to Figure 8-2. The amount of tax revenue received by the government is a. $2.50. b. $9. C. $4. d. $5. Moving to another question will save this response. M

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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39. Assuming a $7 per unit tax is imposed, in calculating the realative burdent of the tax does it matter whether the government is collecting the tax directly from sellers or from buyers? YES NO
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PRICE 21096 11 8 3 2 1 E Supply Demand H 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 QUANTITY Refer to Figure 8-2. The amount of tax revenue received by the government is a) $10. b) $1. c) s
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