The Current Price of Compact Discs, Which Are Traded in Perfectly

Multiple Choice

The current price of compact discs, which are traded in perfectly competitive markets, is $10.A $1 per unit tax is levied on the discs.Annual record sales decline from five million to four million as a result of the tax.Assuming that the income effect of the tax-induced price change is negligible, the excess burden of the tax will be:

A) $500,000 per year.
B) $1 million per year.
C) $2 million per year.
D) $2.5 million per year.