Refer to the Information Provided in Figure 5

question 162

Multiple Choice

Refer to the information provided in Figure 5.7 below to answer the question(s) that follow. Figure 5.7
The above figure represents the market for pumpkins both before and after the imposition of an excise tax, which is represented by the shift of the supply curve.
-Refer to Figure 5.7. After the tax, store owners are willing to sell ________ pumpkins at a price of ________ each.

• A) 1,200; $5.50
• B) 700; $7.25
• C) 0; $8.50
• D) 1,200; $7.25

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Definitions:

Explicit Costs

Direct, out-of-pocket payments for resources employed by firms for production, such as wages or rent.

Accounting Profit

The net income a company reports on the financial statements, calculated by subtracting total expenses from total revenues.

Economic Profit

The variance between what a business earns in total and what it spends, counting both actual expenses and notional costs.

Efficient Output

The level of production where the maximum possible output is achieved with the given resources and technology, minimizing waste and cost.