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A-Level Economics · Indirect tax diagram question

Which area is the government's TAX REVENUE?

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The diagram

The answer

The area C F E A. Tax per unit (£4) × units still traded (3): the full rectangle CFEA between the two prices. Revenue = £4 × the 3 traded units — rectangle CFEA. Top half BLEA is the consumers' burden, bottom half CFLB the producers'.

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This is one of 9 questions on the indirect tax diagram — every corner lettered, every wrong answer diagnosed.

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