Kyle Places a $10 Value on a Glass of Red

question 78

Multiple Choice

Kyle places a $10 value on a glass of red wine,and Keith places an $8 value on it.If there is no tax on glasses of red wine,the price of a glass of red wine reflects the cost of making it.The equilibrium price for a glass of red wine is $6.Suppose the government levies a tax of $2 on each glass of red wine,and the equilibrium price of a glass of red wine increases to $8.How much tax revenue is collected?

• A)$0
• B)$2
• C)$4
• D)$6