Table 12-4

-Refer to Table 12-4.Suppose that the government imposes a $2 tax on delights,causing the price to increase from $5.00 to $7.00.Deadweight loss arises because
A) Jennifer will pay more tax as a percentage of her value of delights than Brad.
B) Brad must pay the $2.00 tax from his consumer surplus.
C) Brad will have to pay a higher price for delights.
D) Jennifer will leave the market.

Question

Table 12-4
 
-Refer to Table 12-4.Suppose that the government imposes a $2 tax on delights,causing the price to increase from $5.00 to $7.00.Deadweight loss arises because
A) Jennifer will pay more tax as a percentage of her value of delights than Brad. 
B) Brad must pay the $2.00 tax from his consumer surplus. 
C) Brad will have to pay a higher price for delights. 
D) Jennifer will leave the market.

Quizplus · Accepted Answer

When the price increases due to the tax, Jennifer, who values delights at $6.00, will leave the market because the new price of $7.00 exceeds her willingness to pay, resulting in a deadweight loss.

Table 12-4 -Refer to Table 12-4.Suppose That the Government Imposes a $2