Consider an Excise Tax Imposed on Daily Parking Charges in the Downtown

question 77

Multiple Choice

Consider an excise tax imposed on daily parking charges in the downtown of a small city.Before the imposition of the tax,equilibrium price and quantity are $15 and 100 cars parked.(P = $15,Q = 100) .The city government imposes a tax of $3 per car parked per day.Market equilibrium adjusts to P = $16 and Q = 95.What is the total after-tax revenue received per day by the seller after imposition of the tax?

• A)$1235
• B)$1600
• C)$1500
• D)$1520
• E)$1425

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Definitions:

Perfect Competitor

A firm in a perfectly competitive market where it is a price taker and has no control over the market price of its product.

Imperfect Competitor

A firm or entity that has some control over the market price of its product because it does not operate in a perfectly competitive market.

Perfect Competitor

A theoretical market structure where many firms offer identical products, firms are price takers, and there are no barriers to new firms entering the market.

Imperfect Competitor

A market participant who does not follow the norms of perfect competition, possibly due to having some control over prices or market share.