Government-imposed taxes cause reductions in the activity that is being taxed, which has important implications for revenue collections. To understand the effect of such a tax, consider the monthly market for cigarettes. With no tax, the equilibrium quantity is 100 packs. The following table shows the equilibrium quantity produced and sold in the market for various per unit taxes. Таx Quantity (Dollars per pack) (Packs) 100 4 80 60 10 50 12 40 16 20 20 Suppose the government imposes a $4-per-pack tax on suppliers. At this tax amount, the equilibrium quantity of cigarettes is packs, and the government collects $ in tax revenue.

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