Mandla Values a Pair of Blue Jeans at R400

question 47

Multiple Choice

Mandla values a pair of blue jeans at R400. If the price is R350, Mandla buys the jeans and generates consumer surplus of R50. Suppose a tax is placed on blue jeans that causes the price of blue jeans to rise to R450. Now Mandla chooses not to buy a pair of jeans. This example has demonstrated

• A) the deadweight loss from a tax.
• B) the ability-to-pay principle.
• C) the benefits principle.
• D) horizontal equity.
• E) the administrative burden of a tax.

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Skills Model

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