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Of the $220 in surplus lost by consumers and producers, $200 is recovered in the form of tax revenues.
This market and the one with more elastic demand both began with an equilibrium price of $4.50 and quantity of 60, and in both markets an excise tax of $4 was imposed. However, when demand is more inelastic, as in the market shown to the right, quantity falls less, to 50 rather than 40, and tax revenue is greater, $200 rather than $160.
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