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:

Lorenz Curve

A graphical representation showing the distribution of income or wealth within a society, indicating the degree of inequality.

Income Quintile

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Non-Cash Assistance

Support provided to individuals or families that does not involve direct financial payments, such as food stamps, housing vouchers, or healthcare services.

Poverty Income Threshold

A specified income level, set by government standards, below which an individual or family is considered to be living in poverty.