Table 12-4 -Refer to Table 12-4.Suppose That the Government Imposes a $2

question 191

Multiple Choice

Table 12-4

-Refer to Table 12-4.Suppose that the government imposes a $2 tax on delights,causing the price to increase from $4.00 to $6.00.Deadweight loss arises because

• A) Lucy will pay more tax as a percentage of her value of delights than Ricky.
• B) Ricky must pay the $2.00 tax from his consumer surplus.
• C) Ricky will have to pay a higher price for delights.
• D) Lucy will leave the market.

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Definitions:

False Consensus

A cognitive bias whereby individuals overestimate how much others share their beliefs, attitudes, and behaviors.

Popular

Being liked, admired, or supported by a large number of people, often in a social context.

Preferences

Individual choices or inclinations towards certain options, ideas, or items over others based on personal taste or values.

Transference

A phenomenon in psychoanalysis where emotions or desires originally associated with one person, typically from early life, are unconsciously transferred onto another in the present.