Leonard, Sheldon, Raj, and Penny Each Like to Attend Comic-Book

question 76

Multiple Choice

Leonard, Sheldon, Raj, and Penny each like to attend comic-book conventions. The price of a ticket to a convention is $50. Leonard values a ticket at $70, Sheldon at $65, Raj at $60, and Penny at $55. Suppose that if the government taxes tickets at $5 each, the price will rise to $55. A consequence of the tax is that consumer surplus shrinks by

• A)$50 and tax revenues increase by $20, so there is a deadweight loss of $30.
• B)$30 and tax revenues increase by $20, so there is a deadweight loss of $10.
• C)$20 and tax revenues increase by $20, so there is no deadweight loss.
• D)$50 and tax revenues increase by $20, so there is no deadweight loss.

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Definitions:

Duress

A situation where a person performs an act as a result of violence, threat, or other pressure against the person, raising questions about the voluntariness of the act.

Scienter

In legal contexts, scienter is the knowledge or intent to deceive, defraud, or violate statutes or regulations.

Representations

Statements or assertions made by one party to another, often regarding the condition or status of something, which can impact agreements or contracts.

Innocent Misrepresentation

A misrepresentation made without fault or knowledge of its falsity, which may allow the misled party to void the contract but not claim damages.