Suppose There Is Only One Movie Theatre in a Town

question 56

Multiple Choice

Suppose there is only one movie theatre in a town and the equilibrium price and quantity for movie admissions is $7 and 940 visits per week.Now suppose the government imposes a tax of $3 per movie admission,and the new equilibrium price and quantity are $8.75 and 750 visits per week.What is the direct burden of this tax?

• A)$937.50
• B)$1312.50
• C)$1645
• D)$2250
• E)There is not enough information to know.

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