The Following Figure Shows the Supply and Demand Curves in a Competitive

question 83

Multiple Choice

The following figure shows the supply and demand curves in a competitive market for a good. The government is considering a $1.50 tax on this good.

-Refer to the above figure.If the $1.50 tax is collected from the producers of this good,the effective price of a unit of this good for the consumers will ________.

• A) $2.50
• B) $3.50
• C) $4
• D) $5

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Definitions:

Coupon

A voucher entitling the holder to a discount for a particular product or service.

Zero-Coupon Bond

A bond that is issued at a discount and repaid at face value at maturity, without periodic interest payments.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates, typically expressed in years.

Coupon

The interest rate on a bond that the issuer promises to pay to the holder until maturity.