Refer to the Accompanying Table, Where Q Represents the Quantity

question 60

Multiple Choice

Refer to the accompanying table, where Q represents the quantity produced, internal cost and external cost are given for various quantities, and P represents the price consumers are willing to pay for various quantities. $\begin{array}{rrr}Q&\text { Internal Cost }&\text { External Cost }&P\\1&\$ 2 & \$ 4 & \$ 14 \\2&\$ 4 & \$ 4 & \$ 12 \\3&\$ 6 & \$ 4 & \$ 10 \\4&\$ 5 & \$ 4 & \$ 8 \\5&\$ 10 & \$ 4 & \$ 6 \\6&\$ 12 & \$ 4 & \$ 4\end{array}$ The market equilibrium occurs where price is __________ and quantity is _________.

• A) $4; 2
• B) $8; 4
• C) $10; 3
• D) $10; 5
• E) $12; 6

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Definitions:

Consumption Tax

A tax levied on the purchase of goods and services, which can include value-added tax (VAT), sales tax, or excise taxes.

Income Tax

A tax that governments impose on income generated by businesses and individuals within their jurisdiction.

Aggregate Demand

The total demand for all goods and services in an economy at a given overall price level and within a specified time period.

Aggregate Demand

Total economic demand for goods and services within an economy, calculated at a fixed price level during a designated time frame.