The Diagram Below Shows Supply and Demand Curves for Bicycles

question 3

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 $500 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)$0.5 million
• B)$1.0 million
• C)$1.5 million
• D)$2.0 million
• E)$0

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Definitions:

Rebalancing

Realigning the proportions of assets in a portfolio as needed.

In-the-money

A term used in options trading to indicate that an option has intrinsic value, meaning it is profitable to exercise.

Intrinsic Value

The actual, fundamental value of an asset, based on underlying perceptions of its true value including all aspects of the business, in terms of both tangible and intangible factors.

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase a stock or other asset at a set price within a specific time period.