The Graph Shown Demonstrates a Tax on Buyers

question 23

Multiple Choice

The graph shown demonstrates a tax on buyers. Which of the following can be said about the effect of this tax?

• A) The tax creates a shortage, and rationing must occur.
• B) The tax creates excess supply and the government must buy the excess.
• C) The tax creates a shortage, and the government must regulate the market.
• D) None of these are correct.

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Definitions:

Hypothesis Test

A statistical method that uses sample data to evaluate a hypothesis about a population parameter, determining whether there is enough evidence to reject the null hypothesis.

Rejection Region

In hypothesis testing, the range of values for which the null hypothesis is considered unlikely and is therefore rejected.

Chi-Square Distribution

A statistical distribution that is used to determine the goodness of fit of an observed distribution to an expected one under the null hypothesis.

Critical Value(s)

Specific point(s) on a distribution curve that define the threshold for rejecting the null hypothesis in hypothesis testing.