Refer to the graph shown. Initially, the market is in equilibrium with price equal to $12 and quantity equal to 140. As a result of a per-unit tax imposed by the government, the supply curve shifts from S0 to S1. The effect of the tax is to:
A. reduce consumer surplus by $240.
B. give government tax revenues of $100.
C. reduce consumer surplus by $200.
D. give government tax revenues of $280.
Answer: A
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A) Figure A B) Figure B C) Figure C D) Figure D
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A) remained relatively stable. B) decreased. C) increased. D) drifted apart.
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a. true b. false