The Diagram Below Shows Supply and Demand Curves for Bicycles

question 32

Multiple Choice

The diagram below shows supply and demand curves for bicycles in the domestic Canadian market.Assume that all bicycles are identical.
FIGURE 34- 4
-Refer to Figure 34- 4.Suppose the world price of bicycles is $200 and Canada has in place a 50% tariff on this good.The deadweight loss to the Canadian economy resulting from this tariff is per year.

• A)$1.0 million
• B)$2.0 million
• C)$0.5 million
• D)$0
• E)$1.5 million

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Definitions:

Cost Method

An accounting approach used for recording investments, where the investment is recorded at its acquisition cost and adjustments are made for dividends or significant changes in value.

Stock Split

A corporate action where a company divides its existing shares into multiple shares to boost the liquidity of the shares.

Common Stock

A form of corporate equity ownership, representing a claim on a portion of a company’s profits and assets.