Question

Imagine that the price that consumers pay for a good is equal to $4. The government collected $1 of taxes for every unit sold. How much does the firm get to keep after the tax is paid (i.e. Ptax-tax)? o $1

o $2
o $3 o $4 o $5

Answer 1

$3 because if they are having a product at 4 dollars and lose a Dollar for ever one sold then $4-$1 = $3