(Table: Market for Fried Cheesecake) Use Table: Market for Fried Cheesecake. The government decides to tax fried cheesecake at a rate of $0.30 per cheesecake and collect the tax from consumers. After the tax is paid, producers will receive _____ per cheesecake, and they will sell _____ cheesecakes after the tax.
A)$3.10; 3,000
B)$3.20; 5,000
C)$3.30; 7,000
D)$3.50; 5,000

Question

(Table: Market for Fried Cheesecake) Use Table: Market for Fried Cheesecake. The government decides to tax fried cheesecake at a rate of $0.30 per cheesecake and collect the tax from consumers. After the tax is paid, producers will receive _____ per cheesecake, and they will sell _____ cheesecakes after the tax. 
A)$3.10; 3,000 
B)$3.20; 5,000 
C)$3.30; 7,000 
D)$3.50; 5,000

Quizplus · Accepted Answer

With a tax of $0.30 per cheesecake, consumers will have to pay $3.20 per cheesecake. This will lower the quantity demanded to 5,000 cheesecakes, which is the quantity that producers are willing to supply at the higher price of $3.20. Therefore, producers will receive $3.20 per cheesecake and sell 5,000 cheesecakes after the tax. Option B is the only one that corresponds to these values.