The Inverse Demand Function for Lemons Is Defined by the Equation

question 30

Multiple Choice

The inverse demand function for lemons is defined by the equation p = 120 - 11q, where q is the number of crates that are sold. The inverse supply function is defined by p = 8 + 3q. In the past there was no tax on lemons but now a tax of $84 per crate has been imposed. What are the quantities produced before and after the tax was imposed?

• A) 4 crates before and 3 crates after
• B) 8 crates before and 2 crates after
• C) 16 crates before and 5 crates after
• D) 16 crates before and 5 crates after.
• E) None of the above.

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