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.Total consumer surplus will fall from
A) $4 to $1.
B) $7 to $4.
C) $3 to $1.
D) $7 to $3.

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.Total consumer surplus will fall from
A) $4 to $1. 
B) $7 to $4. 
C) $3 to $1. 
D) $7 to $3.

Quizplus · Accepted Answer

The correct answer is A because the consumer surplus is the difference between the price consumers are willing to pay and the price they actually pay. When the price of delights increases from $5.00 to $7.00, the consumer surplus will fall from $4 to $1.

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