Suppose the equilibrium quantity in the market for widgets is 200 per month when there is no tax. Then a tax of $5 per widget is imposed. As a result, the government is able to raise $750 per month in tax revenue. We can conclude that the equilibrium quantity of widgets has fallen by
a. 25 per month.
b. 50 per month.
c. 75 per month.
d. 100 per month.
Answer: B
Microeconomics
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