Use the Following to Answer Questions

question 2

Multiple Choice

Use the following to answer questions:
Scenario: The Market for Good X:
The market for good X can be depicted with the following demand and supply equations:
Demand: P = 50 - 0.5Q
Supply: P = 0.33Q
where P is price per unit and Q represents quantity in units. Policy makers plan on imposing a $1 per unit tax on this good.
-(Scenario: The Market for Good X) Look at the scenario The Market for Good X. The per-unit tax incidence on consumers is equal to:

• A) $1.00.
• B) $0.60.
• C) $58.80.
• D) $60.00.

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Definitions:

Marginal Revenue

The supplementary earnings received from the sale of one extra unit of a good or service.

Monopoly Power

Monopoly power refers to the ability of a company or entity to control the supply of a good or service, and to significantly influence the terms and price under which it is sold.

Marginal Cost

The extra financial burden of producing another unit of a good or service.

Monopoly Power

The ability of a single seller to control market prices and output in a particular industry.