Scenario 12-3
Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket. In addition, suppose the price of a movie ticket is $5.
-Refer to Scenario 12-3.Suppose the government levies a tax of $1 on a movie ticket and that,as a result,the price of a movie ticket increases to $6.If Bob and Lisa both purchase a movie ticket,what is the deadweight loss from the tax?
A) $0
B) $1
C) $2
D) $3

Question

Quizplus · Accepted Answer

The deadweight loss is $0 because both Bob and Lisa still purchase the ticket even after the tax, meaning there is no reduction in the quantity of tickets sold.

Scenario 12-3 Suppose That Bob Places a Value of $10 on a on a Movie