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Suppose the Market Demand Function for Ice Cream Is Qd=10-2P

Question 2

Multiple Choice

Suppose the market demand function for ice cream is Qd=10-2P and the market supply function for ice cream is Qs=4P-2, both measured in millions of gallons of ice cream per year. Suppose the government imposes a $0.50 tax on each gallon of ice cream. The price paid by buyers with the tax is


A) $2
B) $2.34
C) $2.50
D) $2.25

Correct Answer:

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