Scenario 12-1 Skip Places a $20 Value on a Bottle of Wine

question 259

Multiple Choice

Scenario 12-1
Skip places a $20 value on a bottle of wine, and Walt places a $17 value on it. The equilibrium price for a bottle of wine is $15.
-Refer to Scenario 12-1.Suppose the government levies a tax of $3 on each bottle of wine,and the equilibrium price of a bottle of wine 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:

Elected Official

An individual who has been chosen by voters to hold a public office through a democratic electoral process.

Direct Democracy

Direct democracy is a form of government in which citizens directly participate in the decision-making processes, rather than through elected representatives, often through referendums and initiatives.

Gerrymandering

The manipulation of electoral district boundaries to favor one party or class.

Retrospective Voting

A theory in political science where voters make decisions based on a politician's or a political party's past performance rather than future promises.