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

Question 14

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 loss in consumer surplus due to the tax is


A) $3
B) $1.80
C) $2
D) $1.20

Correct Answer:

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