Figure 18-2 Figure 18-2 Shows a Demand Curve and Two Sets of Curve

question 72

Multiple Choice

Figure 18-2

Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold, what is the size of the deadweight loss, if there is any?

• A)the area adc if the supply curve is S₀ and the area bec if the supply curve is S₁.
• B)the area afcd if the supply curve is S₀ and the area bfce if the supply curve is S₁.
• C)the area becf under either supply curve.
• D)There is no deadweight loss; revenue raised is used to fund government projects.

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Definitions:

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the production cost.

Direct Materials

Raw materials that can be directly traced back to the production of specific goods or services.

Standard Costs

Predetermined costs of manufacturing a single unit or a number of units during a specific period under normal conditions.

Expected Price

The anticipated market price of a good, service, or asset, often based on historical trends, current market conditions, and future forecasts.