(Figure: The Market for Hamburgers) Use Figure: The Market for Hamburgers.If the market is originally in equilibrium and the government imposes an excise tax of $0.80 per unit of the good sold,consumer surplus will be reduced by:

A) $175.
B) $240.
C) $105.
D) $90.

Question

Shazweenas Alisah · Accepted Answer

Final Answer : A, Explanation :  The correct answer is A because the excise tax of $0.80 per unit of the good sold will reduce consumer surplus by the area of the triangle formed by the demand curve, the equilibrium price, and the new equilibrium price after the tax. This area is calculated as 0.5 * (0.80) * (150) = $60. Since the tax is imposed on both buyers and sellers, consumer surplus will be reduced by twice this amount, or $120.

(Figure: The Market for Hamburgers) Use Figure: The Market for Hamburgers.If the market is originally in equilibrium and the government imposes an excise tax of $0.80 per unit of the good sold,consumer surplus will be reduced by:

A) $175.
B) $240.
C) $105.
D) $90.

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Learning Objectives

Related questions

(Figure: The Market for Hamburgers) Use Figure: The Market for Hamburgers.If the market is originally in equilibrium and the government imposes an excise tax of $0.80 per unit of the good sold,consumer surplus will be reduced by:A) $175.B) $240.C) $105.D) $90.

Definitions

Learning Objectives

Learning Objectives

Related questions

(Figure: The Market for Hamburgers) Use Figure: The Market for Hamburgers.If the market is originally in equilibrium and the government imposes an excise tax of $0.80 per unit of the good sold,consumer surplus will be reduced by:

A) $175.
B) $240.
C) $105.
D) $90.