Question 1
Refer to Scenario 19.3 below to answer the question(s) that follow.
SCENARIO 19.3: Suppose demand for widgets is given by the equation
P = 20 - 0.5
Q. Originally, the price of the good is $10 per unit. When a tax of $2 per unit is imposed, the price of the good rises to $12 per unit.
Refer to Scenario 19.3. What is the excess burden of the tax?
◦ $4
◦ $36
◦ $64
◦ $100
Question 2
Refer to Scenario 19.3 below to answer the question(s) that follow.
SCENARIO 19.3: Suppose demand for widgets is given by the equation
P = 20 - 0.5
Q. Originally, the price of the good is $10 per unit. When a tax of $2 per unit is imposed, the price of the good rises to $12 per unit.
Refer to Scenario 19.3. Prior to the imposition of the tax consumers purchased ________ widgets and after the tax was imposed they purchased ________ widgets.
◦ 16; 20
◦ 20; 16
◦ 10; 8
◦ 40; 32
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