How tax will increase goverment revenue

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you are an economic advisor to the Treasury of the united states. congress is considering increasing the sales tax on gasoline by $.03 per gallon. Last year motorist purchased 10 million gallons per month.The deman curve is such that every $.01 increase in price decreases sales by $100,000 per month. you also know that for every $.01increase in price, producers are willing to provise 50,000 more gallons to the market. The legislature has stated that the $.03 tax will increase goverment revenue by $300,000 per month and raise the price of gasoline by $.03 per gallon. is this correct?

Reference no: EM1360608

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