Suppose Max Values a Concert Ticket at $45

question 323

Multiple Choice

Suppose Max values a concert ticket at $45. Charles values the same concert ticket at $40. The pre-tax price of a concert ticket is $30. The government imposes a tax of $5 on each concert ticket, and the price rises to $35. The deadweight loss from the tax is

• A)$15.
• B)$10.
• C)$5.
• D)$0.

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Definitions:

Average Revenue

Total revenue divided by the number of units sold, indicating the average income per unit of output.

Marginal Revenue

Marginal revenue is the additional income received from selling one more unit of a good or service, critical for decision-making in resource allocation.

Monopoly Price

The price set by a monopolist, which is typically higher and produces lower output than would be the case in a competitive market.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at various prices.