Scenario 12-2 Suppose That Bob Places a Value of $10 on a on a Movie

question 234

Multiple Choice

Scenario 12-2
Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket. In addition, suppose the price of a movie ticket is $5.
-Refer to Scenario 12-2. Suppose the government levies a tax of $3 on a movie ticket and that, as a result, the price of a movie ticket increases to $8. What is total consumer surplus after the tax is imposed?

• A)$0
• B)$1
• C)$2
• D)$3

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Definitions:

Horizontal Price Fixing

An illegal agreement between competitors to fix, control, or maintain prices at a certain level, often leading to reduced competition.

Airline Companies

Businesses that provide air transport services for traveling passengers and freight.

Tickets

Documents or electronic codes that grant the holder a right to enter a venue, travel on a vehicle, or participate in an event.

Tying Arrangement

A business practice where a seller requires the purchase of a secondary product or service in addition to a primary product or service.