Scenario 12-2 Suppose Roger and Regina Receive Great Satisfaction from Their Consumption

question 218

Multiple Choice

Scenario 12-2
Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $8 for it. Roger would be willing to pay $11 for his first slice, $9 for his second slice, and $5 for his third slice. The current market price is $5 per slice.
-Refer to Scenario 12-2.Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $9.What is Regina's consumer surplus from cheesecake?

• A) zero
• B) $2
• C) $3
• D) $6

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Definitions:

Breach of Contract

A legal term referring to the violation of a binding agreement between two or more parties.

Contractual Duties

Obligations that parties must follow as outlined in a contract, enforceable by law.

Expected Utility

Expected utility theory represents how rational individuals with preferences choose among risky alternatives to maximize their satisfaction or utility.

Toll Road

A public or private roadway for which a fee is assessed for passage, commonly used to fund road maintenance or construction projects.