The Inverse Demand Function for Eggs Is P = 125

question 32

Multiple Choice

The inverse demand function for eggs is p = 125 - 6q, where q is the number of cases of eggs.The inverse supply is p = 5 + 6q.In the past, eggs were not taxed, but now a tax of 72 dollars per case has been introduced.What is the effect of the tax on the quantity of eggs supplied?

• A)Quantity drops by 7 cases.
• B)Quantity drops by 5 cases.
• C)Quantity drops by 6 cases.
• D)Quantity drops by 12 cases.
• E)None of the above.

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Definitions:

Money Multiplier

A factor that quantifies the amount of money the banking system generates with each unit of reserves.

Bonds

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Money Supply

The money supply refers to the total amount of monetary assets available in an economy at a specific time, including cash and deposits.

Leverage Ratio

A leverage ratio is a financial metric used to measure the level of debt used by a business in relation to its equity or assets, indicating the financial health and risk of the entity.