Suppose That a Specific Tax of $3 Is Imposed on Producers

question 47

Multiple Choice

Suppose that a specific tax of $3 is imposed on producers of bread.The bread market supply is Qs = 10 + 0.5P and the bread market demand is Qd = 100-P.What is the change in the equilibrium quantity of bread induced by the tax incidence?

• A) Equilibrium quantity decreased by three units.
• B) Equilibrium quantity increased by two units.
• C) Equilibrium quantity decreased by one unit.
• D) Equilibrium quantity increased by one unit.

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Definitions:

Devaluing

Reducing or underestimating the importance, value, or worth of something or someone.

Ineffective Communication

The unsuccessful exchange of information between individuals, resulting in misunderstandings or failure to convey messages accurately.

False Hope

Providing optimism or encouragement about an outcome that is unlikely to happen, often without evidence or basis in reality.

Avoid

Refers to deliberately staying away from or preventing something.