Suppose a tax on buyers has been imposed in the graph shown. The amount of deadweight loss generated by this tax is:
A. $0.
B. $72.
C. $36.
D. $18.
Answer: D
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If the interest rate on a bond is below the equilibrium interest rate, there is an excess ________ of bonds and the bond price will ________
A) demand; rise B) demand; fall C) supply; rise D) supply; fall
Rent seeking is defined as
A) charging higher prices for an apartment. B) the act of obtaining special treatment by the government to create an economic profit. C) charging a price below marginal cost. D) selling a greater quantity than is profitable. E) charging different prices for different units of the good or service.
Firms exit a competitive market when they incur an economic loss. In the long run, this exit means that the economic losses of the surviving firms
A) increase. B) decrease until they equal zero. C) decrease until economic profits are earned. D) do not change. E) might change but more information is needed about what happens to the price of the good as the firms exit.
The law of demand implies that the demand curve
A) has a negative slope. B) has a positive slope. C) shifts to the right when the price of a good increases. D) shifts to the left when the price of a good decreases.