(Advanced Analysis)The Equations for the Demand and Supply Curves for a Particular

question 235

Multiple Choice

(Advanced analysis) The equations for the demand and supply curves for a particular product are P = 10 − 0.4 Q and P = 2 + 0.4 Q, where P is price and Q is quantity expressed in units of 100. After an excise tax is imposed on the product, the supply equation is P = 3 + 0.4 Q. The excise tax on each unit of the product

• A)is $1.
• B)is $2.
• C)is $3.
• D)cannot be determined with the information given.

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Definitions:

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.