Refer to Scenario 19

question 109

Multiple Choice

Refer to Scenario 19.3 below to answer the question(s) that follow.
SCENARIO 19.3: Suppose demand for widgets is given by the equation P = 20 - 0.5Q. Originally, the price of the good is $10 per unit. When a tax of $2 per unit is imposed, the price of the good rises to $12 per unit.
-Refer to Scenario 19.3. Prior to the imposition of the tax consumers purchased ________ widgets and after the tax was imposed they purchased ________ widgets.

• A) 16; 20
• B) 20; 16
• C) 10; 8
• D) 40; 32

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Definitions:

Risky

Involving or associated with the possibility of negative outcomes or danger.

Opponent-process Theory

A psychological and neurological model that explains how the perception of colors is achieved by the brain through the activation of opposite (or opponent) processes.

Hedonic State

An individual's experience of pleasure or happiness, often influencing their behavior or decisions.

Opponent-process Theory

A psychological and neurological model that explains emotions as pairs of opposites, asserting that the experience of one emotion will trigger its opposite.