Refer to Scenario 19

question 266

Multiple Choice

Refer to Scenario 19.4 below to answer the question(s) that follow.
SCENARIO 19.4: Suppose demand for widgets is given by the equation P = 10 - 0.25Q. Originally, the price of the good is $5 per unit. When a tax of $1 per unit is imposed, the price of the good rises to $6 per unit.
-Refer to Scenario 19.4. Prior to the imposition of the tax consumer surplus was ________ and after the tax was imposed consumer surplus was ________.

• A) $50; $32
• B) $32; $50
• C) $100; $65
• D) $25; $16

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Definitions:

Treasury Bonds

Long-term government securities issued with a fixed interest rate and maturity of generally more than 10 years.

Brokerage Commission

The charge imposed by a broker for conducting trades or offering specific services.

Interest Revenue

Income earned from lending funds or depositing funds in interest-bearing accounts, often reported as part of non-operating income.

Accrued Interest

Interest that has been earned but not yet received or recorded.