Suppose an Additional "Special" Tax of $0

question 24

Multiple Choice

Suppose an additional "special" tax of $0.10 per litre is imposed on the sale of gasoline in one province.Prior to the tax the price was $1.30 per litre and 10 million litres of gasoline are sold per day.After imposition of the tax,the new equilibrium price and quantity are $1.38 per litre and 9.6 million litres per day.What is the direct burden of this "special" tax?

• A)$768 000 per day
• B)$ 960 000 per day
• C)$192 000 per day
• D)$40 000 per day
• E)There is not enough information to know.

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