Figure 8-2 the Vertical Distance Between Points a and B Represents a Represents

question 235

Multiple Choice

Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.Total surplus without the tax is

• A)$10,and total surplus with the tax is $2.50.
• B)$10,and total surplus with the tax is $7.50.
• C)$20,and total surplus with the tax is $2.50.
• D)$20,and total surplus with the tax is $7.50.

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Definitions:

Present Exchange Rate

The current rate at which one currency can be exchanged for another in the foreign exchange market.

U.K. Bills

Short-term debt instruments issued by the United Kingdom government to finance its operations.

Risk-Free Rate

A concept describing the return investors expect to earn from an absolutely risk-free investment over a certain period of time, typically associated with government bonds.

Forward Rate

A term in finance that refers to the future interest rate agreed upon in a forward contract, or the rate used to discount a future financial transaction.