Gce Model Questions Vol1 2019 Economics Question 36

Practice objective / multiple choice question 36 from the 2019 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2019 Economics Objective / Multiple Choice Medium Difficulty
Question 36 GCE_MODEL_QUESTIONS_VOL1 • 2019 • ECONOMICS • objective

The government imposes a specific tax of \(\$2\) per unit on a good. The market demand is \(Q_d = 120 - 4P\) and the market supply (price received by producers) is \(Q_s = 20 + 2P\), where \(P\) is the price in dollars. Calculate the tax revenue generated and the dead‑weight loss caused by the tax.

Answer Options

Correct Answer A. Tax revenue = \(\frac{304}{3}\) ≈ \(\$101.33\); Dead‑weight loss = \(\frac{8}{3}\) ≈ \(\$2.67\).
B. Tax revenue = \(\frac{300}{3}\) ≈ \(\$100.00\); Dead‑weight loss = \(\frac{10}{3}\) ≈ \(\$3.33\).
C. Tax revenue = \(\frac{308}{3}\) ≈ \(\$102.67\); Dead‑weight loss = \(\frac{9}{3}\) ≈ \(\$3.00\).
D. Tax revenue = \(\frac{312}{3}\) ≈ \(\$104.00\); Dead‑weight loss = \(\frac{6}{3}\) ≈ \(\$2.00\).
Correct Answer
A
Correct Option:
Tax revenue = \(\frac{304}{3}\) ≈ \(\$101.33\); Dead‑weight loss = \(\frac{8}{3}\) ≈ \(\$2.67\).

About This Question

This is Gce Model Questions Vol1 2019 Economics Question 36. It is one of the objective questions from the 2019 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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