Suppose a Tax of $5 Per Unit Is Imposed on a Good

question 137

Multiple Choice

Suppose a tax of $5 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 200 units to 100 units. The tax decreases consumer surplus by $450 and decreases producer surplus by $300. The deadweight loss from the tax is

• A)$250.
• B)$500.
• C)$750.
• D)$1,000.

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Definitions:

Naive Physics

Naive physics is the common-sense understanding of the physical world that people develop based on their everyday experiences, often without formal education in physics.

Object Persistence

The property of an object to continue existing even when it is not being perceived or observed.

Piaget's Theory

A theory of cognitive development that describes how children's intellectual abilities evolve through four stages from infancy to adolescence.

Vygotsky's Theory

A theory that emphasizes the fundamental role of social interaction in the development of cognition, suggesting that community and culture play central roles in the process of making meaning.