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.Which of the following statements is correct?
A) Jim will bear the full burden of the deadweight loss.
B) Joan will bear the full burden of the deadweight loss.
C) Both Joan and Jim will share the burden of the deadweight loss.
D) There will be no deadweight loss.

Question

Quizplus · Accepted Answer

The Answer of 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.Which of the following statements is correct?
A) Jim will bear the full burden of the deadweight loss.
B) Joan will bear the full burden of the deadweight loss.
C) Both Joan and Jim will share the burden of the deadweight loss.
D) There will be no deadweight loss.

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