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

question 87

Multiple Choice

Figure 8-7
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-7.Which of the following statements is correct?

• A)The loss of producer surplus that is associated with some sellers dropping out of the market as a result of the tax is $60.
• B)The loss of consumer surplus for those buyers of the good who continue to buy it after the tax is imposed is $120.
• C)The loss of consumer surplus caused by this tax exceeds the loss of producer surplus caused by this tax.
• D)This tax produces $320 in tax revenue for the government.

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Definitions:

Service Revenue

Income earned by a company through the provision of services to customers or clients.

Notes Payable

A written promise to pay a specified amount of money, along with interest, by a certain date.

Interest Expense

Expenses that a company faces for using borrowed capital, usually shown on the profit and loss statement.

Owner's Equity

The residual interest in the assets of an entity that remains after deducting its liabilities. It represents the ownership interest of the shareholders in a company.