Assume the Supply Curve for Diapers Is a Typical,upward-Sloping Straight

question 56

Multiple Choice

Assume the supply curve for diapers is a typical,upward-sloping straight line,and the demand curve for diapers is a typical,downward-sloping straight line.Suppose the equilibrium quantity in the market for diapers is 1,000 per month when there is no tax.Then a tax of $0.50 per diaper is imposed.The effective price paid by buyers increases from $1.50 to $1.90 and the effective price received by sellers falls from $1.50 to $1.40.The government's tax revenue amounts to $475 per month.Which of the following statements is correct?

• A)After the tax is imposed,the equilibrium quantity of diapers is 900 per month.
• B)The demand for diapers is more elastic than the supply of diapers.
• C)The deadweight loss of the tax is $12.50.
• D)The tax causes a decrease in consumer surplus of $380.

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Definitions:

Preconventional Stage

The first level in Kohlberg's theory of moral development, characterized by an individual's response to moral issues based on consequences to oneself.

Subjective

Based on or influenced by personal feelings, tastes, or opinions rather than external facts.

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The cognitive ability to consider multiple aspects of a situation simultaneously, crucial for developing logic in children.