-Refer to Exhibit 4-2

question 17

Multiple Choice

-Refer to Exhibit 4-2. This income expansion path depicts a(n)

• A) superior good
• B) normal good
• C) inferior good

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Definitions:

Consumer Surplus

The gap between what consumers are prepared and can afford to pay for a product or service versus what they end up paying.

Deadweight Loss

The loss of economic efficiency when the equilibrium outcome is not achievable or not achieved in a market.

Sales Tax

A tax imposed by a government on sales of goods and services, typically calculated as a percentage of the sale price.

Deadweight Loss

An economic inefficiency that occurs when a market does not reach equilibrium, leading to a loss of total social welfare.