The above figure shows the market for gourmet ice cream. In effort to reduce obe

Question

The above figure shows the market for gourmet ice cream. In effort to reduce obesity, government places a dollar 5 tax per gallon on suppliers in this market, shifting the supply curve from S_0 to S_1. The quantity of ice cream consumed before the tax is gallons and the quantity consumed after the tax is gallons. 300,000;200,000 250,000;200,000 200,000;250,00 200,000;200,000 The above figure shows the market for gourmet ice cream. In effort to reduce obesity, government places a dollar 2 tax per gallon on suppliers in this marker, shifting the supply curve from S_0 to S_1. The total tax revenue is equal to dollar 400,000. dollar 500,000. dollar 200,000. dollar 800,000.

Explanation / Answer

20.

The quantity before tax would be the situation where D = S0, 250,000 gallons.

The quantity after tax would be the situation where D = S1, 200,000 gallons.

Answer: B

21.

Total tax revenue = (Difference in price) × Equilibrium quantity

                             = ($13 - $11) × 200,000

                             = $400,000

Answer: A

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