The vertical distance between points A and B represents the original tax.12+11+10987.6Price21D05 1 15 2 25 3 35 4 45 5QuantityRefer to Figure 8-19. If the government changed the per-unit tax from $5.00to $7.50, then the price paid by buyers would be $10.50, the price received bysellers would be $3, and the quantity sold in the market would be 0.5 units.Deadweight loss would now bea. $1.50O b. $0.50c. $4.0Od. $0.625

Deadweight loss is the cost that is incurred in the economy due to inefficiency which occurs when…

12 11 10 9 10 3 Price D 05 1 15 2 25 3 35 4 45 5 Quantity Refer to Figure 8-19. If the government changed the per-unit to $7.50, then the price paid by buyers would be $10.50, the p sellers would be $3, and the quantity sold in the market would Deadweight loss would now be a $1.50

12 11 10 9 10 3 Price D 05 1 15 2 25 3 35 4 45 5 Quantity Refer to Figure 8-19. If the government changed the per-unit to $7.50, then the price paid by buyers would be $10.50, the p sellers would be $3, and the quantity sold in the market would Deadweight loss would now be a $1.50

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The vertical distance between points A and B represents the original tax.
12+
11+
10
9
8
7.
6
Price
2
1
D
05 1 15 2 25 3 35 4 45 5
Quantity
Refer to Figure 8-19. If the government changed the per-unit tax from $5.00
to $7.50, then the price paid by buyers would be $10.50, the price received by
sellers would be $3, and the quantity sold in the market would be 0.5 units.
Deadweight loss would now be
a. $1.50
O b. $0.50
c. $4.0
Od. $0.625

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