Scenario 12-2 Suppose That Bob Places a Value of $10 on a on a Movie

question 301

Multiple Choice

Scenario 12-2
Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket. In addition, suppose the price of a movie ticket is $5.
-Refer to Scenario 12-2. Suppose the government levies a tax of $3 on a movie ticket and that, as a result, the price of a movie ticket increases to $8. What is the deadweight loss from the tax?

• A)$0
• B)$1
• C)$2
• D)$3

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Definitions:

Fixed Budget

A budget that remains constant, regardless of changes in business activity levels.

Allocate Resources

The process of distributing available resources, such as time, money, and manpower, among various tasks or projects.

Specific Purpose

The precise goal or objective that an individual, group, or organization aims to achieve within a defined timeline.

Policy

A standing plan that communicates broad guidelines for decisions and action.