Suppose That a Market Is Initially in Equilibrium

question 40

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 dead-weight loss due to the tax?

• A) $3.
• B) $2.
• C) $1.50.
• D) $1.00.

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Definitions:

First-In, First-Out Method

An inventory valuation method that assumes the first items purchased or produced are the first ones sold, affecting the cost of goods sold and ending inventory value.

Equivalent Units

A concept used in cost accounting to express the amount of materials, labor, and overhead in partially finished goods in terms of complete units of production.

Assembly Department

A section of a manufacturing plant where parts are assembled to create the end product.

Transferred

The act of moving goods, costs, or funds from one account, location, or product to another.