Betty gives piano lessons. She has an opportunitycost of $50 per lesson and charges $60. She hastwo students: Archie, who has a willingness to payof $70, and Veronica, who has a willingness to payof $90. When the government puts a $20 tax onpiano lessons and Betty raises her price to $80, thedeadweight loss is _________ and the tax revenue is_________.a. $10; $20b. $10; $40c. $20; $20d. $20; $40
Betty gives piano lessons. She has an opportunitycost of $50 per lesson and charges $60. She hastwo students: Archie, who has a willingness to payof $70, and Veronica, who has a willingness to payof $90. When the government puts a $20 tax onpiano lessons and Betty raises her price to $80, thedeadweight loss is _________ and the tax revenue is_________.a. $10; $20b. $10; $40c. $20; $20d. $20; $40
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Betty gives piano lessons. She has an opportunity
cost of $50 per lesson and charges $60. She has
two students: Archie, who has a willingness to pay
of $70, and Veronica, who has a willingness to pay
of $90. When the government puts a $20 tax on
piano lessons and Betty raises her
deadweight loss is _________ and the tax revenue is
_________.
a. $10; $20
b. $10; $40
c. $20; $20
d. $20; $40
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