Refer to the Graph Shown

question 164

Multiple Choice

Refer to the graph shown. Assume that the market is initially in equilibrium at a price of $10 and a quantity of 500 units. If the government imposes a $4 per-unit tax on this product, the equilibrium price will change to:

• A) $4.
• B) $8.
• C) $12.
• D) $14.

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Definitions:

Bounded Rationality

A concept that decision-makers are limited in their decision-making capabilities by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make decisions.

Cognitive Limitations

Cognitive limitations are the boundaries of human brain’s capacity to learn, remember, and make rational decisions.

Ambiguous Problems

Challenges or issues lacking clarity and that are open to multiple interpretations or solutions.

Ethical Soundness

The degree to which actions or policies are morally upright and adhere to accepted ethical standards.