Figure 8-1 -Refer to Figure 8-1.Suppose a $3 Per-Unit Tax Is Placed

question 214

Multiple Choice

Figure 8-1
-Refer to Figure 8-1.Suppose a $3 per-unit tax is placed on this good.The tax causes the price received by sellers to

• A) decrease by $3.
• B) increase by $2.
• C) decrease by $1.
• D) increase by $6.

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Definitions:

Absolute Advantage

The capability of a country or individual to produce more of a good or service with the same amount of resources as competitors.

Opportunity Cost

The price paid for not selecting the next most favorable opportunity when deciding.

Production Possibilities Frontier

A curve that depicts all maximum output possibilities for two or more goods given a set of inputs (resources, labor, etc.), assuming all are used efficiently.

Labor Force

The total number of people employed and unemployed, actively seeking employment in an economy.