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Question 154

Multiple Choice

Use the following to answer questions:
Scenario: The Market for Good X:
The market for good X can be depicted with the following demand and supply equations:
Demand: P = 50 - 0.5Q
Supply: P = 0.33Q
where P is price per unit and Q represents quantity in units. Policy makers plan on imposing a $1 per unit tax on this good.
-(Scenario: The Market for Good X) Look at the scenario The Market for Good X. If a $1 per unit tax is imposed, the deadweight loss associated with the tax will be equal to:


A) $1.00.
B) $20.00.
C) $0.50.
D) $0.60.

Correct Answer:

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