Use the Figure Below to Answer the Following Question(s)

question 19

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 4-8

Refer to Figure 4-8. The supply curve S ₁ and the demand curve D indicate initial conditions in the market for soft coal. A $40-per-ton tax on soft coal is levied, shifting the supply curve from S ₁ to S ₂. Imposing the tax increases the equilibrium price of soft coal from

• A) $20 to $60 per ton.
• B) $20 to $50 per ton.
• C) $50 to $60 per ton.
• D) $50 to $90 per ton.

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Definitions:

Production Possibility Frontier

A graph showing the highest possible combinations of two goods that can be made using existing resources and technology.

Output Efficiency

The optimized state where goods or services are produced at the lowest possible cost and with the best allocation of resources.

Marginal Rate

The rate at which one variable changes with respect to a slight change in another variable, often used in the context of taxes or production.

Transformation

The process of changing the structure, appearance, or character of something, often seen in economic contexts as shifts in production or technology.