Scenario 12-3 Suppose Roger and Regina Receive Great Satisfaction from Their Consumption

question 50

Multiple Choice

Scenario 12-3
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 12-3. Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $9. What is the deadweight loss of the tax?

• A)$3
• B)$6
• C)$8
• D)$9

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Definitions:

Exchange Rate

The rate at which one currency can be exchanged for another.

Determined

A term that implies a firm or persistent resolution to achieve a particular outcome or objective.

Trade Balance

The difference between a country's exports and imports, indicating whether a country has a trade surplus or deficit.

Reduced

Describes a condition where something is made smaller in size, amount, or degree.