Which of the Following Statements Is True for Markets in Which

question 39

Multiple Choice

Which of the following statements is true for markets in which the demand curve slopes downward and the supply curve slopes upward?

• A)As the size of the tax increases,tax revenue continually rises and deadweight loss continually falls.
• B)As the size of the tax increases,tax revenue and deadweight loss rise initially,but both eventually begin to fall.
• C)As the size of the tax increases,tax revenue rises initially,but it eventually begins to fall;deadweight loss continually rises.
• D)As the size of the tax increases,tax revenue rises initially,but it eventually begins to fall;deadweight loss falls initially,but eventually it begins to rise.

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Definitions:

Equilibrium Quantity

The amount of products or services available that matches the amount consumers are willing to buy at the equilibrium price in the market.

Equilibrium Point

Point at which quantity demanded equals quantity supplied; where demand and supply curves cross.

Equilibrium Price

The cost at which the amount of a product supplied matches the amount of the product desired.

Equilibrium Quantity

The supply of goods or services meets the demand at the market's equilibrium price.