Figure 18-2 Shows a Demand Curve and Two Sets of Supply

question 148

Multiple Choice

Figure 18-2 shows a demand curve and two sets of supply curves,one set more elastic than the other.
-Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold,what is the size of the deadweight loss,if there is any?

• A)the area adc if the supply curve is S0 and the area bec if the supply curve is S1.
• B)the area afcd if the supply curve is S0 and the area bfce if the supply curve is S1.
• C)the area becf under either supply curve.
• D)There is no deadweight loss;revenue raised is used to fund government projects.

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Definitions:

Family Home

A primary residence where a family lives and conducts their daily activities.

Security Interest

A legal claim or lien on collateral that has been pledged, usually to secure repayment of a loan.

Collateral

Assets pledged by a borrower to secure a loan or credit, which can be seized by the lender if the borrower fails to repay according to the agreed terms.

Enforceable Security Interest

A legal claim or lien on collateral that secures the fulfillment of a debt or obligation, which can be enforced in court.