Question

in the market for widgets, the supply curve is the typical upward-sloping straight line, and the d curve is the typical downward-sloping straight line. The equilibrium quantity in the tax. Then a tax of $5 per widget is imposed. market for widgets is 200 per month when there is no As a result, the government is able to raise $800 per month in tax revenue. We can conclude that the equilibrium quantity of widgets has fallen by a. 40 per month. b. 50 per month. c. 75 per month. d. 100 per month.

Answer 1

Answer:

a. 40 per month

Explanation:

The computation of the fallen equilibrium quantity of widgets is

Since there is no tax so equilibrium quantity would be 200

And , the tax is imposed is $5

So, the tax revenue is

= 200 × $5

= $1,000

And, the government revenue is $800

So, the loss is

= $1,000 - $800

= $200

Now the fallen quantity is

= $200 ÷ $5

= $40