In the Market for Widgets,the Supply Curve Is the Typical

question 205

Multiple Choice

In the market for widgets,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.The equilibrium quantity in the market for widgets is 200 per month when there is no tax.Then a tax of $5 per widget is imposed.The price paid by buyers increases by $2 and the after-tax price received by sellers falls by $3.The government is able to raise $750 per month in revenue from the tax.The deadweight loss from the tax is

• A)$250.
• B)$125.
• C)$75.
• D)$50.

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Definitions:

Significant Influence

The power to participate in the financial and operating policy decisions of an investee but not control those policies.

Inventories

The complete list of items such as property, goods in stock, or the contents of a building, often held for sale in the regular course of a business.

Profit After Tax

The net income remaining after all taxes have been deducted from total revenue.

Unrealised Profit

Profit that has been made on paper through an investment but has not yet been cashed in by selling the asset.