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 $3 on each cigar, and the equilibrium price of a cigar increases to $18. Because total consumer surplus has a. fallen by less than the tax revenue, the tax has no dead weight loss. O b. fallen by exactly the amount of the tax revenue, the tax has no deadweight loss. O c. fallen by more than the tax revenue, the tax has a deadweight loss d. increased by less than the tax revenue, the tax has a deadweight loss.
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 $3 on each cigar, and the equilibrium price of a cigar increases to $18. Because total consumer surplus has a. fallen by less than the tax revenue, the tax has no dead weight loss. O b. fallen by exactly the amount of the tax revenue, the tax has no deadweight loss. O c. fallen by more than the tax revenue, the tax has a deadweight loss d. increased by less than the tax revenue, the tax has a deadweight loss.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter6: Supply, Demand And Government Policies
Section: Chapter Questions
Problem 5QR
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![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 $3 on each cigar, and the equilibrium price of a cigar increases
to $18. Because total consumer surplus has
O a. fallen by less than the tax revenue, the tax has no dead weight loss.
O b. fallen by exactly the amount of the tax revenue, the tax has no deadweight loss.
O c. fallen by more than the tax revenue, the tax has a deadweight loss
O d. increased by less than the tax revenue, the tax has a deadweight loss.
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Transcribed Image Text: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 $3 on each cigar, and the equilibrium price of a cigar increases
to $18. Because total consumer surplus has
O a. fallen by less than the tax revenue, the tax has no dead weight loss.
O b. fallen by exactly the amount of the tax revenue, the tax has no deadweight loss.
O c. fallen by more than the tax revenue, the tax has a deadweight loss
O d. increased by less than the tax revenue, the tax has a deadweight loss.
$
4
R
с
171
%
5
P
16
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0) >
6
F7
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B
&
7
T
Y
10000
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* .00
8
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M
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9
F10
O
V
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Alt
)
O
F11
6065060
P
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+
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Ctrl
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{
[
+ 11
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]
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