Multiple Choice
(Advanced analysis) The equations for the demand and supply curves for a particular product are P = 10 − 0.4 Q and P = 1 + 0.4 Q, where P is price and Q is quantity expressed in units of 100. After an excise tax is imposed on the product, the supply equation is P = 2 + 0.4 Q. The efficiency loss of this tax is
A) $62.50.
B) $125.
C) $87.50.
D) $1.00.
Correct Answer:
Verified
Correct Answer:
Verified
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