Assume that initially there is free trade. If the United States then imposes a 10-cent tax per apple, A. the quantity demanded of apples will be reduced by 2 million apples per day. B. the quantity of apples supplied by U. S. firms will increase by 2 million apples per day. C. the price of apples in the United States will increase to 40 cents per apple. D. all of the above

Question

Social Studies

Ibrahim Franco

15 May, 07:43

Assume that initially there is free trade. If the United States then imposes a 10-cent tax per apple, A. the quantity demanded of apples will be reduced by 2 million apples per day. B. the quantity of apples supplied by U. S. firms will increase by 2 million apples per day. C. the price of apples in the United States will increase to 40 cents per apple. D. all of the above

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Madalyn Guerra · Answer 1

Answer: D all of the above.

Explanation: The number of many apples an individual would be willing and able to buy each day depends in part on the price of apples. Assuming only price changes, then at lower prices, a consumer is willing and able to buy more apples. As the price rises due to the imposed tax, (again holding all else constant), the quantity of apples demanded decreases. The Law of Demand captures this relationship between price and the quantity demanded of a product. It states that there is an inverse (or negative) relationship between the price of a good and the quantity demanded