Scenario 12-2
Suppose Regina and Ben receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $13 for it. Ben would be willing to pay $17 for his first slice, $14 for his second slice, and $10 for his third slice. The current market price is $10 per slice.
-Refer to Scenario 12-2. Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $14. What is Regina's consumer surplus from cheesecake?
A)$0
B)$4
C)$14
D)$13

Question

Quizplus · Accepted Answer

With the new equilibrium price at $14 due to the tax, and considering Regina was only willing to pay up to $13 for a slice, she would not purchase any cheesecake. Therefore, her consumer surplus is $0 because she values the cheesecake less than its market price after the tax.

Scenario 12-2 Suppose Regina and Ben Receive Great Satisfaction from Their Consumption