Solved

Zoe,Chloe,and Brody Each Like to Read Novels

Question 1

Multiple Choice

Zoe,Chloe,and Brody each like to read novels.The current mystery thriller costs 10 dinars.Zoe values it at 15 dinars,Chloe at 13 dinars,and Brody at 11 dinars.Suppose that if the government taxes books at 0.50dinarseach,the selling price rises to 10.50 dinars.A consequence of the tax is that


A) consumer surplus shrinks by 1.50 and tax revenues increase by 1.50,so there is no deadweight loss.
B) consumer surplus shrinks by 9.00 and tax revenues increase by 1.50,so there is a deadweight loss of 7.50.
C) consumer surplus shrinks by 7.50 and tax revenues increase by 7.50,so there is no deadweight loss.
D) consumer surplus shrinks by 7.50 and tax revenues increase by 1.50,so there is a deadweight loss of 6.

Correct Answer:

verifed

Verified

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents