Suppose a Tax Is Imposed on Each New Hearing Aid

question 194

Multiple Choice

Suppose a tax is imposed on each new hearing aid that is sold. The supply curve is a typical upward-sloping straight line, and the demand curve is a typical downward-sloping straight line. As a result of the tax, the equilibrium quantity of hearing aids decreases from 10,000 to 9,000, and the deadweight loss of the tax is $60,000. We can conclude that the tax on each hearing aid is

• A)$60.
• B)$120.
• C)$160.
• D)$200.

---

Definitions:

Worksheet

A document or tool used by accountants to draft adjustments and test balances during the end-of-period reporting process, not part of the formal financial statements.

Financially Self-Sufficient

The ability to support oneself without external assistance, based on personal income or savings.

Independence

The state of being self-sufficient and not reliant on others for decision-making, support, or sustenance.

Grandparenting

The role and activities associated with being a grandparent, which can include nurturing, mentoring, and providing emotional and financial support to grandchildren.