Krugman's Economics For The Ap® Course
Krugman's Economics For The Ap® Course
3rd Edition
ISBN: 9781319113278
Author: David Anderson, Margaret Ray
Publisher: Worth Publishers
Question
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Chapter 9R, Problem 17MCQ
To determine

Consumer surplus by buyers in the jean market before imposition of tax and after the imposition of tax.

Expert Solution & Answer
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Explanation of Solution

Consumer surplus before the imposition of tax would be:

  Consumer surplus before the imposition of tax = Price before tax× quantity sold                                                                          = $12.5×50                                                                          = $625

  Consumer surplus after the imposition of tax would be:Consumer surplus after the imposition of tax = Price after tax× quantity sold                                                                       = D1Dt×20                                                                       = $50$30 ×20                                                                       = $400

Therefore, the correct option is a.

Economics Concept Introduction

Introduction:

Any excess in production, earning, or the supply of goods is called surplus which is more than the need.

A tax burden involves the payment that a taxpayer pays to the government and an economic loss that a taxpayer bears in reaction to taxes.

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