Figure 8-7 the Vertical Distance Between Points a and B Represents a Represents

question 124

Multiple Choice

Figure 8-7
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-7.Suppose a 20^th unit of the good were sold by a seller to a buyer.Which of the following statements is correct?

• A)For the 20^th unit,the difference between the buyer's value and the seller's cost is less than the tax per unit.
• B)For the 20^th unit,the difference between the buyer's value and the seller's cost is greater than the tax per unit.
• C)For the 20^th unit,the difference between the buyer's value and the seller's cost is equal to the tax per unit.
• D)It makes sense for the buyer to buy and for the seller to sell the 20^th unit,with or without the tax in place.

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Definitions:

Marginal Costs

The surcharge associated with the fabrication of an additional unit of a good or service.

Short-Run Supply Schedule

The Short-Run Supply Schedule illustrates how much of a good or service producers are willing to supply at different price levels within a short time frame.

Cost Data

Information related to the expenses involved in producing a good or service, including materials, labor, and overhead costs.

Shutdown Point

The level of production and price at which a firm's total revenue is equal to its total variable costs, below which the firm would cease production temporarily.