Consider a Perfectly Competitive Market with Market Supply $Q ^ { s } = - 2 + P$

question 42

Multiple Choice

Consider a perfectly competitive market with market supply $Q ^ { s } = - 2 + P$ and market demand $Q ^ { d } = 30 - P$ . Suppose the government imposes an excise tax of $\$ 4$ per unit on this market.
What is total surplus (consumer surplus plus producer surplus) before the government imposes the tax?

• A) 72
• B) 98
• C) 144
• D) 196

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Definitions:

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