Question 22 2 pts Rigure 8-7 The vertical distance between points A and B repres

Question

Question 22 2 pts Rigure 8-7 The vertical distance between points A and B represents a tax in the market Price 48 Supply 40 36 24 20 16 12 Demand 5 10 15 20 25 30 35 40 45 50 55 60nti Refer to Figure 8-7. Suppose a 20th unit of the good were sold by a seller to a buyer. Which of the following statements is correct? O For the 20th unit, the difference between the buyer's value and the seller's cost is less than the tax per unit. O For the 20th unit, ke difference between the buyer's value and the seller's cost is greater than the tax per unit. OFor the 20th unit, the difference between the buyer's value and the seller's cost is equal to the tax per unit. It makes sense for the buyer to buy and for the seller to sell the 20th unit, with or without the tax in place. O

Explanation / Answer

The correct answer is (A) i.e for the 20th unit, the difference between buyer's value and seller's cost is less than the tax per unit.

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