-In the Figure Above, S Is the Supply Curve and D

question 179

Multiple Choice

-In the figure above, S is the supply curve and D is the demand curve in the unregulated, competitive market for gasoline in Motorland. The external cost of gasoline is constant at $1.50 per gallon. Suppose Motorland's government imposes a tax of $1.50 per gallon of gasoline sold. With the tax, the market will

• A) underproduce by 0.2 million gallons of gasoline a month.
• B) underproduce by 0.1 million gallons of gasoline a month.
• C) overproduce by 0.1 million gallons of gasoline a month.
• D) produce the efficient quantity of gasoline.

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Definitions:

Fast Food Restaurant

A dining establishment that offers quick service, convenience, and food served fast, often from a limited menu.

Customers Arrive

The process or event of clients or patrons reaching a service point or facility where they expect to receive a service or product.

Exponential Distribution

A statistical distribution used to model the time between events in a process where events occur continuously and independently at a constant rate.

Bank Teller

An employee of a bank who deals directly with customers, handling withdrawals, deposits, and other transactions.