Refer to the Graph Shown

question 148

Multiple Choice

Refer to the graph shown. Assume that the market is initially in equilibrium at a price of $6 and a quantity of 40 units. If the government imposes a $2 per-unit tax on this product, the equilibrium price will change to:

• A) $4.
• B) $5.
• C) $7.
• D) $8.

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Definitions:

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the percentage of any additional dollar of income that will be paid in taxes.

State-Run Lotteries

Government-operated lotteries, which serve as a revenue source for the state, typically contributing to public sectors such as education.

Higher-Income Families

Refers to households that have an income level significantly above the median or average income for their area or country.

Local Governments

Governmental authorities that operate at a level below the state or national, managing local affairs such as city, town, or village administration.