Figure 8-4
The vertical distance between points A and B represents a tax in the market.

-Refer to Figure 8-4.The equilibrium price before the tax is imposed is
A) $12, and the equilibrium quantity is 70.
B) $8, and the equilibrium quantity is 100.
C) $5, and the equilibrium quantity is 70.
D) $5, and the equilibrium quantity is 100.

Question

Figure 8-4
The vertical distance between points A and B represents a tax in the market.
 
-Refer to Figure 8-4.The equilibrium price before the tax is imposed is
A) $12, and the equilibrium quantity is 70. 
B) $8, and the equilibrium quantity is 100. 
C) $5, and the equilibrium quantity is 70. 
D) $5, and the equilibrium quantity is 100.

Quizplus · Accepted Answer

The equilibrium price and quantity are determined at the intersection of the supply and demand curves. Before the tax is imposed, the equilibrium price is $8 and the equilibrium quantity is 100. This is where the supply and demand curves intersect.

Figure 8-4 the Vertical Distance Between Points a and B Represents a Represents