when looking at a graph that analyzes Marginal Excess Burden, we chose the commodity of Hats, H0= hats quantity demanded at Po which is equal to marginal cost, H1 is quantity demanded at Po + th, th is the unit tax on hats, and then H2 is the quantity demanded at P0 + th + 1, the 1 symbolizes that we have increased the unit tax by $1. explain this: The slope of demand is: 1 (H1-H2)= th (H0-H1), therefore: th = (H0-H1) (H1-H2) And = th(H1-H2)= (H0-H1) = H0, for small changes as goes to zero. Therefore, H0 = marginal excess burden induced by the tax increase. Note that H2 = H0 - (H0-H1) - (H1 - H2) = H0 - H0 - H0/th = H0 - H0 (1 + 1/th) H2 ($1) H0 = Change in Tax Revenue = R