Refer to Scenario 19

question 67

Multiple Choice

Refer to Scenario 19.3 below to answer the question(s) that follow.
SCENARIO 19.3: Suppose demand for widgets is given by the equation P = 20 - 0.5Q. Originally, the price of the good is $10 per unit. When a tax of $2 per unit is imposed, the price of the good rises to $12 per unit.
-Refer to Scenario 19.3. Prior to the imposition of the tax consumer surplus was ________ and after the tax was imposed consumer surplus was ________.

• A) $100; $64
• B) $64; $100
• C) $200; $128
• D) $50; $32

---

Definitions:

Test Statistic

A statistic calculated from sample data, used to determine whether to reject the null hypothesis.

Coin

A flat, typically round piece of metal with an official stamp, used as money.

Heads

One of the two possible outcomes when flipping a standard coin, the other being tails.

Chi-Square Distribution

A statistical distribution that is used to describe the distribution of a sum of the squares of k independent standard normal random variables, useful in hypothesis testing and constructing confidence intervals.