Asked by
Dayna Butler
on Nov 17, 2024
Verified
Refer to Figure 8-3. Suppose a 20th unit of the good were sold by a seller to a buyer. Which of the following statements is correct?
A) For the 20th unit, the difference between the buyer's value and the seller's cost is less than the tax per unit.
B) For the 20th unit, the difference between the buyer's value and the seller's cost is greater than the tax per unit.
C) For the 20th unit, the difference between the buyer's value and the seller's cost is equal to the tax per unit.
D) It makes sense for the buyer to buy and for the seller to sell the 20th unit, with or without the tax in place.
Buyer's Value
The maximum amount that a buyer is willing to pay for a good or service, reflecting the personal value the buyer attributes to the product.
Seller's Cost
The total expenses incurred by a seller in producing and selling a product, including manufacturing, labor, and material costs.
Tax Per Unit
A fixed amount of tax imposed on a product or service, regardless of its selling price.
- Recognize and evaluate the deadweight loss incurred from taxation.
Verified Answer
BB
Learning Objectives
- Recognize and evaluate the deadweight loss incurred from taxation.