Scenario 12-1 Suppose Jim and Joan Receive Great Satisfaction from Their Consumption

question 85

Multiple Choice

Scenario 12-1
Suppose Jim and Joan receive great satisfaction from their consumption of cheesecake.Joan would be willing to purchase only one slice and would pay up to $6 for it.Jim would be willing to pay $9 for his first slice,$7 for his second slice,and $3 for his third slice.The current market price is $3 per slice.
-Refer to Scenario 12-1.Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $7.What is the deadweight loss of the tax?

• A) $3
• B) $6
• C) $8
• D) $9

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Definitions:

Durham Rule

A legal standard used to determine a defendant's criminal responsibility, stating that an accused is not criminally responsible if their unlawful act was the product of mental disease or defect.

Durham v. United States

A landmark court case that altered the criteria for determining criminal insanity in the United States, focusing on the accused's mental state at the time of the offense.

Temporary Insanity

A legal defense argument that a person was incapable of understanding the nature of their actions or distinguishing right from wrong due to a temporary mental state.

Act of Self-Defense

A legal defense that justifies the use of force by one individual against another under threat of harm.