Suppose the Domestic Market Demand Function in a Certain Market

question 45

Multiple Choice

Suppose the domestic market demand function in a certain market where Q is measured in thousands of units is Q^d = 20 - 2.5P,and the domestic market supply function is Q^s = 2.5P - 7.5.Suppose further that the world price for the good in question is $3.40 per unit.If the government places a $1.20 tariff on imported units of this good,by how much is producer surplus increased?

• A) $3,200
• B) $3,600
• C) $5,400
• D) $3,000

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Definitions:

Cross Bridge

A myosin projection on a muscle cell that connects with actin to contract muscle fibers, fundamental in muscle contraction.

Opposite Direction

Referring to a movement, orientation, or action that is directly contrary or reverse to another.

Creatine Phosphate

A high-energy reserve molecule in muscles and the brain that donates phosphate to ADP to regenerate ATP during the first seconds of intense work.

ATP

Adenosine triphosphate (ATP) is a complex organic chemical that provides energy to drive many processes in living cells.