Question

In the market for gadgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for gadgets is 320 per month when there is no tax. Then a tax of $6 per gadget is imposed. As a result, the government is able to raise $1,500 per month in tax revenue. We can conclude that the equilibrium quantity of widgets has fallen by

Answer 1

Answer:

70 units

Explanation:

Quantity = Tax revenue / Tax per unit

Quantity = $1,500/$6

Quantity = 250

Change in Quantity = 320 - 250

Change in Quantity = 70 units

So, the quantity decreased 70 units per money. Hence, we can conclude that the equilibrium quantity of widgets has fallen by 70 units.