Scenario 12-1
Suppose Jim and Joan receive great satisfaction from their consumption of cheesecake.Joan would be willing to purchase only one slice and would pay up to $6 for it.Jim would be willing to pay $9 for his first slice,$7 for his second slice,and $3 for his third slice.The current market price is $3 per slice.
-Refer to Scenario 12-1.Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $7.What is Joan's consumer surplus from cheesecake?
A) zero
B) $2
C) $3
D) $6

Question

Quizplus · Accepted Answer

Joan would only buy a slice if the price is $6 or less. With the new price at $7 due to the tax, she will not buy any cheesecake, resulting in zero consumer surplus.

Scenario 12-1 Suppose Jim and Joan Receive Great Satisfaction from Their Consumption