Chapter 9R, Problem 14MCQ

To determine

The tax per pair if the government levies a tax on buyers of the product where the demand curve shifts from D1 to Dt.

Explanation of Solution

If the government levies a tax on buyers of the product where the demand curve shifts from D1 to Dt then the tax per pair would be:

  $\begin{array}{l}=\left(\text{D1}-\text{Dt}\right)+\text{ P}\hfill \\ =(50-30)+10\hfill \\ =30\hfill \end{array}$

Therefore, the correct option is c.

Economics Concept Introduction

Introduction:

A demand curve shows a graphical representation of relationship between price and demand that represents how change in price affects the quantity demanded.