Refer to Figure 4-15. As a result of the tax, is there a loss in consumer surplus?
A) No, because the producer pays the tax.
B) No, because the market reaches a new equilibrium
C) No, because consumers are charged a lower price to cover their tax burden.
D) Yes, because consumers pay a price above the economically efficient price.
D
You might also like to view...
Given the information in the figure above, Liz has a comparative advantage in ________ because ________
A) smoothies; her opportunity cost of producing smoothies is lower than Joe's B) salads; her opportunity cost of producing salads is lower than Joe's C) smoothies; she can produce more smoothies per hour than Joe can D) salads; she can produce more salads per hour than Joe can E) both goods; she can produce more of both goods per hour than Joe can
A general rule of political economy in a democracy is that when small groups are helped by a government action and large groups are hurt by that action by an equal and offsetting amount, policies tend to reflect:
A. the small group's interest. B. neither group's interest over the other. C. the large group's interest. D. the interest of a free market.