A Tax of $20 Per Unit Is Imposed on a Certain

question 103

Multiple Choice

A tax of $20 per unit is imposed on a certain market.The tax reduces the equilibrium quantity in the market by 200 units.What is the deadweight loss from the tax

• A)$500
• B)$2000
• C)$3500
• D)$4000

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Definitions:

Principal

The initial amount of money borrowed or invested, excluding any interest or dividend.

Interest

The fee charged for borrowing money, often expressed as a percentage of the principal amount.

Maturity Date

The specified date on which the final payment of a loan or other financial instrument is due to be paid.

Bondholders

Individuals or institutions that hold the debt securities issued by corporations or governmental entities, entitling them to receive interest payments and the return of principal.