Asked by Carol Jasso on Jun 30, 2024
Verified
Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?
A) Less than 60 units
B) 60 units
C) Between 60 units and 100 units
D) Greater than 100 units
Equilibrium Quantity
The quantity of goods or services that is supplied and demanded at the equilibrium price, where the market clears.
- Master the concept of how taxation impacts the configuration of supply and demand curves, leading to market equilibrium adjustments.
Verified Answer
CM
Ciala ManagadzeJul 01, 2024
Final Answer :
C
Explanation :
The imposition of a tax shifts the supply curve upwards by the amount of the tax, leading to a new equilibrium where the quantity is less than the original equilibrium quantity (100 units) but more than the quantity at which the tax is imposed (60 units), hence between 60 units and 100 units.
Learning Objectives
- Master the concept of how taxation impacts the configuration of supply and demand curves, leading to market equilibrium adjustments.