Suppose a Tax of $5 Per Unit Is Imposed on a Good

question 137

Multiple Choice

Suppose a tax of $5 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 200 units to 100 units. The tax decreases consumer surplus by $450 and decreases producer surplus by $300. The deadweight loss from the tax is

• A)$250.
• B)$500.
• C)$750.
• D)$1,000.

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Definitions:

Operating Activities

Activities directly related to the primary operations of a business, including production, sales, and day-to-day administration.

Accounts Payable

Short-term liabilities a company owes to its suppliers or creditors, usually due within one year.

Investing Activities

Transactions involving the acquisition or disposal of non-current assets, such as equipment and investments.

Net Cash Provided

The amount of cash generated through business operations over a specific period after accounting for operational expenses and investment activities.