The Supply Curve for Whiskey Is the Typical Upward-Sloping Straight

question 80

Multiple Choice

The supply curve for whiskey is the typical upward-sloping straight line,and the demand curve for whiskey is the typical downward-sloping straight line.When whiskey is taxed,the area on the relevant supply-and-demand graph that represents

• A)government's tax revenue is a rectangle.
• B)the deadweight loss of the tax is a triangle.
• C)the loss of consumer surplus caused by the tax is neither a rectangle nor a triangle.
• D)All of the above are correct.

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Definitions:

Average Variable Cost

The total variable cost divided by the quantity of output produced.

Average Fixed Costs

The fixed costs of production divided by the quantity of output produced, illustrating how fixed costs per unit decrease as production increases.

Profit-Maximizing

The strategy or approach adopted by a company to increase its earnings to the highest possible level.

Perfectly Competitive

A market structure where there are many buyers and sellers, all of whom have full and symmetric information, and there are no barriers to entry or exit.