Suppose the equilibrium quantity in the market for baby formula is 1,000 per month when there is no tax. Then a tax of $0.50 per bottle is imposed. The effective price paid by buyers increases from $2.50 to $2.90 and the effective price received by sellers falls from $2.50 to $2.40. The government’s tax revenue amounts to $475 per month. Which of the following statements is correct? A. After the tax is imposed, the equilibrium quantity of diapers is 900 per month. B. The demand for diapers is more elastic than the supply of diapers. C. The deadweight loss of the tax is $12.50. D. The tax causes a decrease in consumer surplus of $380

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