Suppose That a Market Is Initially in Equilibrium

question 7

Multiple Choice

Suppose that a market is initially in equilibrium.The initial demand curve is The initial supply curve is Suppose that the government imposes a $3 tax on this market.What is the change in consumer surplus due to the tax?

• A) $450.
• B) $420.50.
• C) $29.50.
• D) $0.50.

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Definitions:

Projected Future Sales

Estimates of the amount of goods or services a company expects to sell over a future period.

Sustainable Growth Rate

The maximum rate at which a company can grow its earnings without needing to increase its financial leverage or equity financing.

Financial Statement

A written record that conveys the business activities and the financial performance of a company.

Debt-Equity Ratio

The measure indicating the dual use of debt and equity in the economic structuring of a company’s assets.