Suppose the market demand function for ice cream is Qd = 10 - 2P and the market supply function for ice cream is Qs = 4P - 2, both measured in millions of gallons of ice cream per year. Suppose the government imposes a $0.50 tax on each gallon of ice cream. The loss in consumer surplus due to the tax is:
A. $3.56 million.
B. $1.89 million.
C. $7.11 million.
D. $944,444.
B. $1.89 million.
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