Refer to the Above Data

question 140

Multiple Choice

Refer to the above data.If government levies a per-unit excise tax of $1 on suppliers of this product,equilibrium price and quantity will be:

• A) $9 and 3,000.
• B) $7.50 and 2,250.
• C) $8.50 and 2,250.
• D) $7 and 3,000.

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Definitions:

Fixed Costs

Financial obligations like rent, wages, and insurance that are stable and do not vary with the level of goods manufactured or sold.

Break-even

The point at which total revenues equal total costs, resulting in neither profit nor loss for the business.

Margin of Safety

The difference between actual or projected sales and the break-even point. It indicates the amount of sales decline a business can endure before it starts incurring losses.

Variable Costs

Costs that change in proportion to the level of activity or production volume.