The Current Equilibrium Price in the Market Is $12

question 82

Multiple Choice

The current equilibrium price in the market is $12.50, while the equilibrium quantity is 7,500 units. Suppose the government places a $5 per unit tax on the market, leading to a new equilibrium demanded price of $15 and equilibrium quantity of 5,000 units. Using the midpoint method, the price elasticity of demand will be

• A) 0.46.
• B) 1.8.
• C) 1.01.
• D) 2.2.

---

Definitions:

Cost Center

A department or unit within a business where costs are incurred, but which does not directly generate revenue.

Actual Costs

The true, realized expenses incurred during the production of goods or services, as opposed to estimated or projected costs.

Decentralized Operations

is an organizational structure where decision-making and operational responsibilities are delegated to individual departments or locations.

Support Department

A department that provides a necessary service to produce a product but is not directly involved in the production process. Also known as a service department.