Refer to Scenario 19

question 176

Multiple Choice

Refer to Scenario 19.3 below to answer the question(s) that follow.
SCENARIO 19.3: Suppose demand for widgets is given by the equation P = 20 - 0.5Q. Originally, the price of the good is $10 per unit. When a tax of $2 per unit is imposed, the price of the good rises to $12 per unit.
-Refer to Scenario 19.3. What is the excess burden of the tax?

• A) $4
• B) $36
• C) $64
• D) $100

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Definitions:

Brachial

Pertaining to the arm, especially the upper arm, or an arm-like structure.

Radial

Pertaining to the radius bone in the forearm or relating to structures that are located near or radiate from a central point.

Sciatic Nerve

Tibial and common peroneal nerves bound together; also called ischiadic nerve.

Tibial Nerve

A nerve in the lower leg that is a branch of the sciatic nerve, responsible for innervating parts of the lower leg and foot.