Suppose a Good Is Produced in a Constant-Cost Industry

question 117

Multiple Choice

Suppose a good is produced in a constant-cost industry.The market price is $4 and the equilibrium quantity is 20.After a tax is imposed on the good,the price rises to $5 and the equilibrium quantity falls to 18.The amount of the tax is

• A) $1 per unit sold.
• B) less than $1 per unit sold.
• C) more than $1 per unit sold.
• D) $0.50 per unit sold.

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Definitions:

Experimental Group

In an experiment, the group of participants that receives the treatment or intervention under investigation, as opposed to the control group.

Random Assignment

Assigning participants to experimental and control groups by chance, thus minimizing preexisting differences between the different groups.

Test Difficulty

The measure of how challenging an examination or a set of questions is, often determined by the proportion of test-takers who answer correctly.

Experimental Group

The group in an experiment that receives the variable being tested, contrasted with a control group that does not.