How is government revenue calculated when a tax is imposed?

The calculation of government revenue when a tax is imposed is determined by multiplying the tax rate by the quantity of the good sold. In this context, the tax is a per-unit charge that the government collects from sellers, which means that as long as there are units being sold, revenue is generated based on the number of those transactions.

When you multiply the tax amount by the quantity sold, you arrive at the total revenue that the government collects from that particular tax. This reflects the effective impact of the tax on both consumers and businesses within the marketplace, as businesses will typically pass on some of the tax burden to consumers through higher prices. It is essential to consider the quantity sold because if fewer units are sold, the total revenue from the tax decreases.

The other options do not correctly represent how government revenue is derived from taxation. For instance, dividing the tax by the quantity demanded or using quantity supplied in relation to market price does not give a meaningful measurement of tax revenue. Additionally, simply adding the tax rate to the market price does not take into account how many units are actually sold and thus fails to capture the full picture of revenue generation for the government.