(Advanced Analysis) the Equations for the Demand and Supply Curves

question 130

Multiple Choice

(Advanced analysis) The equations for the demand and supply curves for a particular product are P = 10 − 0.4Q and P = 2 + 0.4Q, where P is price and Q is quantity expressed in units of 100. After an excise tax is imposed on the product, the supply equation is P = 3 + 0.4Q. The efficiency loss of this tax is

• A) $125.00.
• B) $62.50.
• C) $87.50.
• D) $1.00.

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