Scenario 12-1
Skip places a $20 value on a bottle of wine, and Walt places a $17 value on it. The equilibrium price for a bottle of wine is $15.
-Refer to Scenario 12-1.Suppose the government levies a tax of $3 on each bottle of wine,and the equilibrium price of a bottle of wine increases to $18.What is total consumer surplus after the tax is levied?
A) $0
B) $2
C) $5
D) $6

Question

Quizplus · Accepted Answer

Skip will still buy the wine as his value ($20) is greater than the new price ($18), gaining a consumer surplus of $2 ($20 - $18). Walt will not buy as his value ($17) is less than the price. Total consumer surplus is $2.

Scenario 12-1 Skip Places a $20 Value on a Bottle of Wine