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Consider a Perfectly Competitive Market with Market Supply Qs=2+PQ ^ { s } = - 2 + P

Question 7

Multiple Choice

Consider a perfectly competitive market with market supply Qs=2+PQ ^ { s } = - 2 + P and market demand Qd=30PQ ^ { d } = 30 - P . Suppose the government imposes an excise tax of $4\$ 4 per unit on this market.
What is the deadweight loss from this tax?


A) 2
B) 4
C) 6
D) 8

Correct Answer:

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