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

question 386

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.How much tax revenue will be generated from sales to Jim and Joan?

• A) zero
• B) $4
• C) $8
• D) $12

---

Definitions:

Future Market Values

Estimations or predictions about the worth or price of investments or assets at a future point in time, based on expected market trends and conditions.

Leasing

A process by which one party, the lessor, grants another party, the lessee, the right to use an asset for a specified period of time in exchange for periodic payments.

Assets

Economic resources owned by an individual or business, capable of being converted into cash or used to generate revenue.

Less Restrictive Financing

Financing options that offer more flexible terms and conditions, often resulting in higher levels of debt that can be used by a company for expansion or other purposes.