Suppose a Tax of $5 Per Unit Is Imposed on a Good.The

question 214

Multiple Choice

Suppose a tax of $5 per unit is imposed on a good.The supply curve is a typical upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.The tax decreases consumer surplus by $10,000 and decreases producer surplus by $15,000.The deadweight loss of the tax is $2,500.The tax decreased the equilibrium quantity of the good from

• A)6,500 to 5,500.
• B)5,500 to 4,500.
• C)5,000 to 3,000.
• D)6,000 to 4,000.

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Definitions:

Measures Of Cost

Various metrics and methods used to quantify the expenses involved in producing a good or providing a service, including fixed, variable, and total costs, which are critical for business decision-making and pricing strategies.

Total Cost

The overall expenses incurred by a firm in producing goods or services, including both fixed and variable costs.

Average-Total-Cost Curve

A graphical representation that shows how the average total cost of production changes as the quantity of output is altered.

Diminishing Marginal Product

A principle stating that as additional units of a variable input are added to a fixed input, the additional output produced from each new unit decreases.