Figure 8-4

-Refer to Figure 8-4.What is the equilibrium market price and quantity before the tax is imposed
A)P₁ and Q₁
B)P₂ and Q₂
C)P₃ and Q₁
D)P₁ and Q₂

Question

Figure 8-4
 
-Refer to Figure 8-4.What is the equilibrium market price and quantity before the tax is imposed
A)P₁ and Q₁ 
B)P₂ and Q₂ 
C)P₃ and Q₁ 
D)P₁ and Q₂

Quizplus · Accepted Answer

Before the tax is imposed, the equilibrium market price and quantity are determined by the intersection of the demand and supply curves. The point where the two curves intersect is labeled as (P₁, Q₁) in the graph. Therefore, the correct answer is A) P₁ and Q₁.

Figure 8-4 -Refer to Figure 8-4.What Is the Equilibrium Market Price and Equilibrium