Zoe,Chloe,and Brody Each Like to Read Novels

question 320

Multiple Choice

Zoe,Chloe,and Brody each like to read novels.The current mystery thriller costs $10.Zoe values it at $15,Chloe at $13,and Brody at $11.Suppose that if the government taxes books at 50 cents each the selling price rises to $10.50.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.

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Definitions:

Setup Activity

The tasks involved in preparing equipment or processes for a new production run or activity, often considered in activity-based costing.

Process Engineer

A professional who designs, implements, controls, and optimizes industrial processes, especially continuous ones within the chemical, energy, or manufacturing sectors.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing a more accurate reflection of the costs incurred.

Highlight

A highlight is a feature or element that is emphasized or made more noticeable, often used to draw attention to a specific point or detail.