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

question 140

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, when the market is in equilibrium, the deadweight loss is

• A) zero.
• B) $37,500 per month.
• C) $150,000 per month.
• D) $75,000 per month.

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Definitions:

Clarifying Assumptions

The process of making explicit any taken-for-granted beliefs or premises in communication or decision making.

Minimizing

The act of reducing something to the smallest possible amount or degree.

Listener's Problem

The challenges a listener might face in accurately receiving and interpreting a message due to various factors.

Reassure

To give confidence or remove doubts from someone by providing support or information.