Suppose Luke Values a Scoop of Italian Gelato at $4

question 71

Multiple Choice

Suppose Luke values a scoop of Italian gelato at $4. Leia values a scoop of Italian gelato at $6. The pre-tax price of a scoop of Italian gelato is $2. The government imposes a "fat tax" of $3 on each scoop of Italian gelato, and the price rises to $5. The deadweight loss from the tax is

• A)$4, and the deadweight loss comes from both Luke and Leia.
• B)$4, and the deadweight loss comes only from Luke because he does not buy gelato after the tax.
• C)$2, and the deadweight loss comes from both Luke and Leia.
• D)$2, and the deadweight loss comes only from Luke because he does not buy gelato after the tax.

---

Definitions:

Production Goods

Products and materials that are used in the manufacturing process to produce the final goods for consumption or sale.

Accessory Equipment

Supplementary components or items that enhance or complete the functionality of a main product or system.

Pneumatic Nail Gun

A tool powered by compressed air used for driving nails into wood or other materials, significantly speeding up construction and carpentry projects.

Copper Wiring

Electrical conductors used for transmitting electricity, known for its excellent conductivity and flexibility.