Figure 8-21 -Refer to Figure 8-21.Suppose the Market Is Represented by Demand

question 31

Multiple Choice

Figure 8-21
-Refer to Figure 8-21.Suppose the market is represented by Demand 1 and Supply 1.At first the government places a $3 per-unit tax on this good.Then the government decides to raise the tax to $6 per unit.How would you characterize the decision to raise the tax rate from $3 to $6 per unit? The decision is

• A)a good one because it increases tax revenue while decreasing the deadweight loss from the tax.
• B)a bad one because it does not increase tax revenue yet increases the deadweight loss from the tax.
• C)a bad one because it decreases tax revenue while increasing the deadweight loss from the tax.
• D)unclear because it increases tax revenue yet also increases the deadweight loss from the tax.

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Definitions:

Equalizer Type

A component in audio equipment or software that adjusts the balance between frequency components within an electronic signal.

Multi-leaf Spring Pack

A suspension component consisting of multiple layers of flat springs stacked together to provide support and absorb shocks.

Jounce

The action of a vehicle suspension compressing, usually in response to riding over bumps or during hard cornering.

Rebound

The reactive response of a spring after being compressed. It kicks back. Suspensions attempt to limit jounce and rebound cycles by using damping devices such as shock absorbers.