Asked by Bridget Parks on May 19, 2024
Verified
Refer to Scenario 12-1. Suppose the government levies a tax of $6 on each bottle of beer, and the equilibrium price of a bottle of beer increases to $20. How much tax revenue is collected?
A) $0
B) $0.5
C) $6
D) $13
Tax Revenue
The income that is collected by the government through various forms of taxation, including income taxes, corporate taxes, and sales taxes, which is then used to fund public services and government operations.
Equilibrium Price
The market price at which the quantity of goods supplied is equal to the quantity of goods demanded.
- Evaluate the impact of taxes on consumer choices and market outcomes.
- Comprehend the function of taxation in mitigating externalities and financing public amenities.
Verified Answer
SL
Sonia LopezMay 26, 2024
Final Answer :
C
Explanation :
The tax revenue collected from each bottle of beer is $6 (the amount of the tax). Since both Max and Mark will still purchase the beer at the new equilibrium price of $20 (which is less than the value they place on it), the government collects $6 in tax for each bottle sold to them, totaling $12. However, the question asks for the tax revenue collected per bottle, which is $6, making the correct answer $6.
Learning Objectives
- Evaluate the impact of taxes on consumer choices and market outcomes.
- Comprehend the function of taxation in mitigating externalities and financing public amenities.