Scenario 12-1 Ken Places a $20 Value on a Cigar, and Mark

question 286

Multiple Choice

Scenario 12-1
Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15.
-Refer to Scenario 12-1. Suppose the government levies a tax of $3 on each cigar, and the equilibrium price of a cigar increases to $18. Because total consumer surplus has

• A)fallen by more than the tax revenue, the tax has a deadweight loss
• B)fallen by less than the tax revenue, the tax has no dead weight loss.
• C)fallen by exactly the amount of the tax revenue, the tax has no deadweight loss.
• D)increased by less than the tax revenue, the tax has a deadweight loss.

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Definitions:

Mean

The calculation of the arithmetic average involves adding up all the values in a series and dividing the total by the quantity of numbers.

Rounded

The process of approximating a number to a specified degree of precision, often to the nearest whole number.

Rounding Rules

Guidelines used in mathematics and statistics for reducing the number of digits in a numeric value according to certain criteria, typically to make the value simpler or more intuitive.

Rounded

The process of adjusting numerical values to a specified degree of accuracy, typically to make them simpler or more manageable.