Suppose There Is Only One Movie Theatre in a Town

question 58

Multiple Choice

Suppose there is only one movie theatre in a town and the equilibrium price and quantity for movie admissions is $9 and 850 visits per week.Now suppose the government imposes a tax of $2 per movie admission and that the new equilibrium price and quantity are $10.50 and 780 visits per week.What is the weekly direct burden of this tax?

• A)$0
• B)$105
• C)$1170
• D)$1560
• E)$1700

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