Figure 8-7 the Vertical Distance Between Points a and B Represents a Represents

question 168

Multiple Choice

Figure 8-7
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-7.As a result of the tax,consumer surplus decreases by

• A)$130,producer surplus decreases by $170,tax revenue is $240,and deadweight loss is $60.
• B)$150,producer surplus decreases by $150,tax revenue is $240,and deadweight loss is $60.
• C)$160,producer surplus decreases by $160,tax revenue is $240,and deadweight loss is $80.
• D)$240,producer surplus decreases by $240,tax revenue is $400,and deadweight loss is $80.

---

Definitions:

Law of One Price

The economic theory that states that the price of an identical asset or commodity will have the same price globally when price differences account for exchange rates.

Yield to Maturity

The total return anticipated on a bond if the bond is held until it matures, incorporating both interest payments received and any gain or loss if the bond is bought at a discount or premium to its face value.

Zero-coupon Bond

A type of bond that does not pay interest during its life but is sold at a discount and matures at its face value.

Maturity

The date on which the principal amount of a loan, bond, or other financial instrument becomes due and payable.