Refer to Scenario 19.3 below to answer the question(s) that follow.
SCENARIO 19.3: Suppose demand for widgets is given by the equation P = 20 - 0.5Q. Originally, the price of the good is $10 per unit. When a tax of $2 per unit is imposed, the price of the good rises to $12 per unit.
-Refer to Scenario 19.3. What is the total burden of the tax?

Question

Quizplus · Accepted Answer

The total burden of the tax is calculated by multiplying the tax per unit by the quantity sold after the tax is imposed. The original price was $10, and after the tax, it became $12, indicating the tax was fully passed to consumers. To find the quantity sold at the new price, we use the demand equation P = 20 - 0.5Q, substituting P with $12 to find Q. Solving 12 = 20 - 0.5Q gives Q = 16. Therefore, the total tax burden is 16 units * $2 tax per unit = $32. However, given the options provided and the context, it seems there might be a misunderstanding in the calculation or the interpretation of the options. The correct approach to find the total burden involves understanding how the tax affects quantity and using the demand equation to calculate it, but without further calculations or corrections, the intended answer might be misaligned with the provided options.