Which of the Following Conditions Must Hold in the Equilibrium

question 51

Multiple Choice

Which of the following conditions must hold in the equilibrium of a competitive market where the government puts a specific tax on consumers?

• A) The quantity sold and the price paid by the buyer must lie on the demand curve.
• B) The quantity sold and the seller's price must lie on the supply curve.
• C) The quantity demanded must equal the quantity supplied.
• D) the difference between the price the buyer pays and the price the seller receives must equal the specific tax.
• E) all of the above

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Definitions:

Tariff

A tax imposed by a government on goods and services imported from other countries to regulate trade and protect domestic industries.

Sugar

A sweet-tasting, soluble carbohydrate found in many plants, widely used as a sweetener in food and beverages.

Import Quota

A restriction by a country on the quantity of a good that can be imported over a given period.

Consumer Surplus

The difference in the amount consumers are prepared to pay versus what they actually pay for goods or services.