Refer to the Figure Below

question 148

Multiple Choice

Refer to the figure below.Which of the following statements is true?

• A)A per-unit tax will result in the greatest reduction of output in the market illustrated in Figure B.
• B)No deadweight loss from a per-unit tax will result in either of the markets illustrated.
• C)A per-unit tax will result in the greatest deadweight loss in the market illustrated in Figure A.
• D)A per-unit tax will result in the greatest loss of consumer surplus in the market illustrated in Figure A.
• E)A per-unit tax will result in the smallest price change in the market illustrated in Figure A.

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Definitions:

Single Firm

A business entity that is the sole provider of a good or service in a particular market, potentially exhibiting monopoly power.

Large Number of Firms

A characteristic of competitive markets where many firms are present, each having a small share of the market and influencing the price minimally.

Defining Characteristics

The unique attributes or qualities that clearly distinguish a person, object, concept, or phenomenon from others within its category or domain.

Small Businesses

Independently owned and operated companies with limited revenue and number of employees, serving local markets.