Refer to the Above Diagram of the Market for Corn

question 271

Multiple Choice

Refer to the above diagram of the market for corn. There will be a surplus of 8 thousand bushels at the price of

• A) $4/bushel.
• B) $3/bushel.
• C) $2/bushel.
• D) $5/bushel.

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Definitions:

Consumer Surplus

The gap between what consumers are prepared and can afford to pay for a product or service versus what they end up paying.

Deadweight Loss

The loss of economic efficiency when the equilibrium outcome is not achievable or not achieved in a market.

Sales Tax

A tax imposed by a government on sales of goods and services, typically calculated as a percentage of the sale price.

Deadweight Loss

An economic inefficiency that occurs when a market does not reach equilibrium, leading to a loss of total social welfare.