Figure 8-3 the Vertical Distance Between Points a and C Represents a Represents

question 227

Multiple Choice

Figure 8-3
The vertical distance between points A and C represents a tax in the market.
-Refer to Figure 8-3.Which of the following equations is valid for the deadweight loss of the tax?

• A)Deadweight loss = (1/2)(P2 - P1)(Q2 + Q1)
• B)Deadweight loss = (1/2)(P3 - P1)(Q2 + Q1)
• C)Deadweight loss = (1/2)(P3 - P2)(Q2 - Q1)
• D)Deadweight loss = (1/2)(P3 - P1)(Q2 - Q1)

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Definitions:

Exiting Firms

Businesses that are leaving a particular market due to various reasons such as unprofitability, strategic realignment, or market saturation.

Increasing-Cost Industry

An industry in which production costs increase as the industry's output expands.

Constant-Cost Industry

An industry where the cost of production does not change as the industry's output changes.

Increasing-Cost Industry

An industry in which costs per unit of output increase as the scale of output is increased due to factors such as shortages of resources or higher input costs.