Figure 8-7 the Vertical Distance Between Points a and B Represents a Represents

question 124

Multiple Choice

Figure 8-7
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-7.Suppose a 20^th unit of the good were sold by a seller to a buyer.Which of the following statements is correct?

• A)For the 20^th unit,the difference between the buyer's value and the seller's cost is less than the tax per unit.
• B)For the 20^th unit,the difference between the buyer's value and the seller's cost is greater than the tax per unit.
• C)For the 20^th unit,the difference between the buyer's value and the seller's cost is equal to the tax per unit.
• D)It makes sense for the buyer to buy and for the seller to sell the 20^th unit,with or without the tax in place.

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Definitions:

Marginal Cost

The extra expense incurred from the production of an additional unit of a product or service.

TVC

Total Variable Costs; the sum of all costs that vary with the level of production, such as materials and labor directly involved in creating a product.

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or output in the short term.

Marginal Product

The additional output that can be produced by adding one more unit of a specific input, holding all other inputs constant.