Consider a Market with a Demand Curve of P =

question 7

Multiple Choice

Consider a market with a demand curve of P = 15 - q and a supply curve of P = 2q.If the government levies a tax on consumers of $3 per unit, what is the resulting DWL?

• A)DWL = $0
• B)DWL = $1
• C)DWL = $1.5
• D)DWL = $2
• E)DWL = $3

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Definitions:

Competitive Market

An economic system where multiple firms sell similar products or services, encouraging fairness and efficiency, driven by supply and demand mechanisms.

Marginal Products

Additional outputs that result from the increment of one unit of input while holding other inputs constant, emphasizing the concept of variable productivity.

Fast Food Restaurant

A quick service eating establishment that serves affordable food items prepared and served quickly.

Cost Of Production

The total expense incurred in manufacturing a product or providing a service, including raw materials, labor, and overhead.