The Following Graph Depicts the Market for CT Scanners in the United

question 7

Multiple Choice

The following graph depicts the market for CT scanners in the United States. Assume an initial equilibrium at D₁ and S₁ with price of $200,000 per machine.If the government places a $20,000 excise tax on each new scanner sold, the new equilibrium price will be

• A)at least $220,000.
• B)exactly $220,000.
• C)less than $220,000.
• D)there's not enough information to determine what the new price will be.

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Definitions:

Variable Cost

Expenses that change in proportion to the activity or volume of business.

Persons Served

A term often used in service delivery and nonprofit sectors to refer to the number of individuals who receive services or benefits from a program.

Cost Behavior

Refers to the way different types of production costs change when there is a change in the level of production.

Curvilinear

Describing a line or surface that is bent, curved, or continuously changing direction, and not straight or circular in the context of mathematics or physics.