Figure 8-21 -Refer to Figure 8-21.Suppose the Market Is Represented by Demand

question 31

Multiple Choice

Figure 8-21
-Refer to Figure 8-21.Suppose the market is represented by Demand 1 and Supply 1.At first the government places a $3 per-unit tax on this good.Then the government decides to raise the tax to $6 per unit.How would you characterize the decision to raise the tax rate from $3 to $6 per unit? The decision is

• A)a good one because it increases tax revenue while decreasing the deadweight loss from the tax.
• B)a bad one because it does not increase tax revenue yet increases the deadweight loss from the tax.
• C)a bad one because it decreases tax revenue while increasing the deadweight loss from the tax.
• D)unclear because it increases tax revenue yet also increases the deadweight loss from the tax.

---

Definitions:

Average Student

A middle or typical student, usually considered in terms of academic achievement, not necessarily referring to the mean score or mean performance.

Final Comprehensive Exam

A cumulative test covering material from an entire course or series of courses, typically given at the end of an academic term or program.

Action Hypothesis

An assumption made for the purpose of action or investigation, guiding decision-making or research direction.

P-Value

The probability of observing results at least as extreme as those measured when the null hypothesis is true, used in hypothesis testing.