Scenario 12-1 Ken Places a $20 Value on a Cigar, and Mark

question 144

Multiple Choice

Scenario 12-1
Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15.
-Refer to Scenario 12-1. Suppose the government levies a tax of $1 on each cigar, and the equilibrium price of a cigar increases to $16. 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 deadweight 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:

County Attorney

A legal officer representing a county in civil litigations and serving as the legal advisor to county officials, often involved in prosecuting crimes at the local level.

Arson

The willful and malicious burning of a building (and, in some states, personal property) owned by another. Arson statutes have been extended to cover the destruction of any building, regardless of ownership, by fire or explosion.

Convicted

The act of being declared guilty of a crime by the verdict of a jury or the decision of a judge in a court of law.

Felony

A crime—such as arson, murder, assault, or robbery—that carries the most severe sanctions. Sanctions range from one year in a state or federal prison to the death penalty.