In the Market for Widgets,the Supply Curve Is the Typical

question 205

Multiple Choice

In the market for widgets,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.The equilibrium quantity in the market for widgets is 200 per month when there is no tax.Then a tax of $5 per widget is imposed.The price paid by buyers increases by $2 and the after-tax price received by sellers falls by $3.The government is able to raise $750 per month in revenue from the tax.The deadweight loss from the tax is

• A)$250.
• B)$125.
• C)$75.
• D)$50.

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Definitions:

Diuril

A trade name for the medication chlorothiazide, a diuretic drug used to treat high blood pressure and fluid retention.

Lasix

A brand name for furosemide, a medication used to treat fluid retention (edema) and swelling caused by congestive heart failure, liver disease, kidney disease, and other medical conditions.

Detrol

A medication used to treat symptoms of an overactive bladder, such as frequent or urgent urination.

Tofranil

A brand name for imipramine, a medication used to treat depression and sometimes enuresis (bedwetting) in children.