Tax revenue as the rectangle between pre- and post-tax supply curves

Steps:

• Identify the vertical shift between SS and S'S', which equals the tax per unit.
• Locate the post-tax equilibrium quantity, where the width of the revenue rectangle ends.
• The tax revenue area is the rectangle formed by the tax height times post-tax quantity.
• Producers remit the full tax to government, so this area captures their payment.

Why B is correct:

• POUT is the rectangle of height equal to tax per unit and width equal to post-tax quantity, per the tax incidence formula (revenue = tax × quantity sold).

Why the others are wrong:

• A. ORWY: Represents producer surplus loss, not revenue.
• C. PRVT: Captures consumer tax burden only.
• D. GRWU: Depicts deadweight loss from reduced quantity.

Final answer: B