Given the following information about a supply and demand curve diagram calculat

Question

Given the following information about a supply and demand curve diagram calculate the Deadweight Loss when the price was fixed below equilibrium Equilibrium price equals: $50 Equilibrium Quantity equals: 3,000 A price Celing of $42 is impose by the government and quantity now sold is equal to 2,400 (this is the point where $42 crosses the Supply curve). If you extend the quantity line upward to demand curve it crosses demand ta $60. ODeadweight Loss $54,000 Deadweight Loss = $24,000 O Deadweight Loss $30,000 O Deadweight Loss $108,000 QUESTION 26 7 points Save Answer Assume that a $2.00 tax has been added to cigars. When will buyers of cigars pays for more of the tax than the sellers? Buyers of cigars have a more elastic price relationship O Sellers of cigars have a more inelastice price relationship O Buyers of cigars have a more inelastic price relationshijp Buyers and Sellers have identical elastic price relationships.

Explanation / Answer

25. The correct answer is A.

26. The correct answer is C. As the demand curve is steeper the greater burden will fall on the consumer.

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