Unit Tax Impact on Firm Revenue

Steps:

• Identify post-tax equilibrium: intersection of demand and S1 gives quantity Q and consumer price P_c.
• Determine producer price: P_p = P_c minus tax per unit (vertical shift of S to S1).
• Calculate firm revenue: after-tax revenue = P_p × Q, as firm receives P_p per unit after paying tax.
• From diagram values, P_p = $2/unit and Q = 50 units, yielding$100.

Why A is correct:

• Matches formula for producer receipts post-tax: revenue equals price net of tax times equilibrium quantity.

Why the others are wrong:

• B: Overstates by using pre-tax supply equilibrium quantity.
• C: Assumes full tax incidence on consumers, ignoring shared burden.
• D: Calculates total consumer expenditure (P_c × Q), not firm receipts.

Final answer: A