Zoe,Chloe,and Brody Each Like to Read Novels

question 260

Multiple Choice

Zoe,Chloe,and Brody each like to read novels.The current bestseller costs $11.Zoe values it at $16,Chloe at $14,and Brody at $12.Suppose that if the government taxes books at $2 each,the selling price will rise to $13.A consequence of the tax is that

• A) consumer surplus shrinks by $4 and tax revenues increase by $6, so there is a deadweight loss of $2.
• B) consumer surplus shrinks by $6 and tax revenues increase by $6, so there is no deadweight loss.
• C) consumer surplus shrinks by $5 and tax revenues increase by $6, so there is no deadweight loss.
• D) consumer surplus shrinks by $5 and tax revenues increase by $4, so there is a deadweight loss of $1.

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Definitions:

5-Number Summary

A statistical summary that provides five key data points: minimum, first quartile, median, third quartile, and maximum.

Smallest Observation

The minimum value recorded in a set of data.

First Quartile

The value below which 25% of the observations fall, marking the lower quarter of the data set.

Median

The middle value in a sorted list of numbers, dividing the dataset into two halves.