-The Graph Shows the Market for Textbooks

question 55

Multiple Choice

-The graph shows the market for textbooks.If the government introduces a tax of $20 a textbook,then the price paid by buyers ________.

• A) increases by $20
• B) increases to $80 a textbook
• C) decreases to $60 a textbook
• D) is $70 a textbook
• E) does not change because the demand for textbooks is perfectly elastic

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Definitions:

Positive Externality

A benefit that affects a party who did not choose to incur that benefit, often associated with public goods and services.

Patent Laws

Regulatory legal frameworks designed to protect the rights of inventors by giving them exclusive rights to their inventions for a certain period.

Business Monopoly Power

The ability of a single company to control an entire market, limiting competition and setting prices.

Resource Allocation

The process of assigning available resources in the most efficient manner to meet the objectives of an organization or economy.