Suppose There Is Only One Movie Theatre in a Town

question 43

Multiple Choice

Suppose there is only one movie theatre in a town and the equilibrium price and quantity for movie admissions is $9 and 850 visits per week.Now suppose the government imposes a tax of $2 per movie admission and that the new equilibrium price and quantity are $10.50 and 780 visits per week.What is the weekly excess burden of this tax?

• A)$0
• B)$2
• C)$70
• D)$1560
• E)$1700